A piano owner hired it out to Brewster for monthly payments with a provision that the piano would become Brewster’s on payment of the required number of monthly payments. Brewster pledged it and the owner sought its recovery.
Held: The basic principle of ‘nemo dat quod non habet’ (one cannot give what one does not have) applies also to a sale by a hire-purchaser. The hirer was under no obligation to make all the payments and purchase the piano. The hire-purchaser has no title to the goods and no power to convey any title to a third party.
Lord Herschell said: ‘it is said that the substance of the transaction evidenced by the agreement must be looked at, and not its mere words. I quite agree. But the substance must, of course, be ascertained by a consideration of the rights and obligations of the parties, to be derived from a consideration of the whole of the agreement. If Brewster agreed to buy the piano, the parties cannot, by calling it a hiring, or by any mere juggling with words, escape from the consequences of the contract into which they entered. What, then, was the real nature of the transaction? The answer to this question is not, I think, involved in any difficulty. Brewster was to obtain possession of the piano, and to be entitled to its use so long as he paid the plaintiff the stipulated sum of 10s. 6d. a month, and he was bound to make these monthly payments so long as he retained possession of the piano. If he continued to make them at the appointed times for the period of three years, the piano was to become his property, but he might at any time return it, and, upon doing so, would no longer be liable to make any further payment beyond the monthly sum then due . . My Lords, I cannot, with all respect, concur in the view of the Court of Appeal, that upon the true construction of the agreement Brewster had ‘agreed to buy’ the piano. An agreement to buy imports a legal obligation to buy. If there was no such legal obligation, there cannot, in my opinion, properly be said to have been an agreement to buy. Where is any such legal obligation to be found? Brewster might buy or not just as he pleased. He did not agree to make thirty-six or any number of monthly payments. All that he undertook was to make the monthly payment of 10s. 6d. so long as he kept the piano. He had an option no doubt to buy it by continuing the stipulated payments for a sufficient length of time. If he had exercised that option he would have become the purchaser. I cannot see under these circumstances how he can be said either to have bought or agreed to buy the piano. The terms of the contract did not upon its execution bind him to buy, but left him free to do so or not as he pleased, and nothing happened after the contract was made to impose the obligation.’ and ‘when a person has, for valuable consideration, bound himself to sell to another on certain terms, if the other chooses to avail himself of the binding offer, he may, in popular language, be said to have agreed to sell, though an agreement to sell in this sense, which is in truth merely an offer which cannot be withdrawn, certainly does not connote an agreement to buy, and it is only in this sense that there can be said to have been an agreement to sell in the present case.’
Lord Macnaghten said: ‘The customer was under no obligation to fulfill the conditions on which and on which alone the dealer undertook to sell. He was not bound to keep the piano for a single day or a single hour.’
Lord Shand said: ‘An agreement to purchase would infer an obligation to pay a price, the payment of which could be enforced by action, while here it is plain that no action for any balance of the alleged price could be maintained if Brewster thought fit at any time to return the instrument to its owner.’
Lord Herschell, Lord Macnaghten, Lord Watson, Lord Shand
 AC 471,  UKLawRpAC 30
England and Wales
Cited – Shogun Finance Limited v Hudson HL 19-Nov-2003
Thief acquired no title and could not sell
A purchaser used a stolen driving licence to obtain credit for and purchase a car. He then purported to sell it to the respondent, and then disappeared. The finance company sought return of the car.
Held: (Lords Nicholls and Millett . .
Lists of cited by and citing cases may be incomplete.
Updated: 14 October 2021; Ref: scu.188450