Lee v Butler
Rule established
Where a person in possession under an agreement is bound to pay the whole price by instalments and has no right to return the goods, the agreement is in substance an agreement to buy, and he may pass a good title to a bona fide purchaser.
Facts
- The plaintiff supplied furniture to Mrs. Lloyd under an agreement described as a hire agreement.
- The agreement required her to pay a stated sum in two instalments at fixed dates.
- She was under an obligation to make those payments and had no liberty to return the furniture and end her liability.
- Ownership was to pass on payment of the final instalment.
- Before completing payment she sold the furniture to the defendant, who bought in good faith without notice.
- The supplier sued the purchaser for the goods.
Issue
- Whether a possessor bound to complete payment by instalments, with no option to return the goods, was a person who had "agreed to buy" them and could therefore pass good title.
Held
- The Court of Appeal held that she had agreed to buy. The agreement, whatever its label, imposed on her an unqualified obligation to pay the whole price, and gave her no right to terminate by returning the goods. She was therefore a person who had agreed to buy goods and had obtained possession with the seller's consent, so the statutory protection applied and the bona fide purchaser obtained a good title.
Ratio Decidendi
The character of such an agreement is determined by whether the possessor is bound to acquire ownership. An unconditional obligation to pay the full price, coupled with possession given by the owner, makes the possessor a buyer in substance and brings a transferee from him within the protection now found in S.30(2) of the Sale of Goods Act 1930.
How to use it in an exam
- The essential counterpart to Helby v Matthews (1895). Present them together as a pair.
- The distinguishing feature is the absence of an option to return, which converts a purported hiring into an agreement to buy.
- Illustrates the exception to nemo dat quod non habet in S.30(2).
- Reinforces the general principle that in classifying commercial transactions the court looks to substance rather than to the description the parties adopt.
Source
Source: [1893] 2 QB 318; contrasting authority to Helby v Matthews; citation and bench checked against Indian Kanoon and reported sources, audit of 12 August 2026
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.