Section 27 of the Hire Purchase Act 1964 and Shogun Finance V Hudson Essay

Commercial Law Coursework

‘If the underlying policy of Section 27 of the Hire Purchase Act 1964 is to extend a strong measure of protection to private purchasers acting in good faith, then the decision in Shogun Finance Ltd v Hudson [2003] UKHL 62 can be seen as an example of this policy being defeated by questionable aspects of the common law.’
Discuss.

Transfer of title and property to goods is considered to be in most cases a relatively straightforward commercial transaction between two parties. There are certain situations where a non-owner having bought goods from the seller disposes them to a third party, which acts in goods faith. The question, which emanates from such cases, is whether the bona fide purchaser has received a valid title to the goods. According to the Latin maxim “nemo dat quod non habet” set out in S21(1) of the Sale of goods Act 1979 the seller cannot pass to a buyer a better title to the goods than he himself possesses. This is an indication that English law generally opts to safeguard the rights of the true owner although there have been attempts to tip the scales in favour of the private purchaser. There are exceptions set out in the SGA, which protect the rights of third parties who have bought the goods from a non-owner without knowledge of the fraud. One of those exceptions is contained in S27(1) of the Hire Purchase Act 1964 which awards a good title to a private purchaser, who buys from a hirer a motor vehicle subject to a hire purchase or conditional sale agreement. According to S27(2) he must do so in good faith, without any notice of the hire purchase agreement. Although S27 has strengthened the commercial position of the private purchaser in order to limit the application of the