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Market Overt in the Sale of Goods: Israeli Law in a Comparative Perspective*

Published online by Cambridge University Press:  16 February 2016

Eyal Zamir
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Extract

Market overt deals with the conflict between the bona fide purchaser of a chattel and the person whose rights in the property are injured by the sale. Schematically there are three people involved in this situation: the original owner, the seller and the purchaser. The most simple illustration is the case in which A steals goods belonging to B and sells them to C, who does not know of their origin. On the common assumption that A disappears or is insolvent (and even on the assumption that his whereabouts are known and it is possible to file a claim against him) the question arises, who is entitled to the goods, B or C, and who must bear the loss. In the absence of special circumstances, one is unable to say which of the two has a more “just” claim to title — both have an absolutely valid claim. The layman and the legalist are confounded by this situation, and are without even a clear intuition of whom to favour.

The large variety of solutions to this dilemma offered by different legal systems is testimony to this conundrum. As in other questions, the Israeli legislature did not adopt a solution drafted by any particular foreign system, but drafted an original and independent rule. Elements of this rule are similar to the constituent elements in comparative rules in other systems, but the compilation of all these constituents is unique and different from all other rules.

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Articles
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Israel Law Review , Volume 24 , Issue 1 , Winter 1990 , pp. 82 - 127
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Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 1990

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References

1 On the technique of Israeli legislation, see generally, Tedeschi, G., “On the Technique of Future Israel Legislation” in Studies in Israel Law (Jerusalem, 1960) 69Google Scholar; Barak, A., “The Independence of the New Civil Codification: Risks and Prospects” (1976) 7 Mishpatim 15Google Scholar.

2 See generally, Tedeschi, G. & Zemach, Y.S., “Codification and Case Law in Israel”, in The Role of Judicial Decisions and Doctrines in Civil Law and Mixed Jurisdictions, Dainow, J., ed., (Baton Rouge, Louisiana State U.P., 1974) 272Google Scholar; Shalev, G. & Herman, S., “A Source Study of Israel's Contract Codification” (1975) 35 La.L.R. 1091Google Scholar; Friedmann, D., The Effect of Foreign Law on the Law of Israel (Israel Law Review Association, Jerusalem, 1975)Google Scholar.

3 On the role of comparative law in the preparation of the new Israeli legislation, see generally, Yadin, U., “The Use of Comparative Law by the Legislator”, in Israeli Reports to the XI International Congress of Comparative Law, Goldstein, S., ed., (Jerusalem, 1982)Google Scholar; Shalev & Herman, supra n. 2.

4 22 L.S.I. 107. For a general review of the Israeli law of sale, see Aronovsky, M., “Comments on the New Law of Sales” (1969) 4 Is.L.R. 141Google Scholar.

5 Compare Smith, T.B., Property Problems in Sale (London, 1978) 149Google Scholar, quoting H. Maine. On another aspect of the original owner's fault, see n. 30 infra, and the text accompanying it.

6 See infra part IIC2.

7 Per Berinson J., in Rosenstreich v. Israel Automobile Co. (1973)27(ii) P.D. 709, at 712.

8 Ibid. On the competition between protection of property rights and protection of the security of commerce, see also Franklin, M., “Security of Acquisition and of Transaction: La Possession Vaut Titre and Bona Fide Purchase” (1931–1932) 6 Tul. L.R. 689Google Scholar; Harding, C.S.P. & Rowell, M.S., “Protection of Property Versus Protection of Commercial Transactions in French and English Law” (1977) 26 Int. & Comp. L.Q. 354CrossRefGoogle Scholar; Davies, I., “Transferability and Sale of Goods” (1987) 7 Legal Stud. 1CrossRefGoogle Scholar.

9 See Weinberg, H.R., “Sales Law, Economics, and the Negotiability of Goods” (1980) 9 J. Legal Stud. 569, at 585–589CrossRefGoogle Scholar.

10 See Weinberg, ibid.

11 See de Zulueta, F., The Roman Law of Sale (Oxford, 1945) 36Google Scholar; Murray, D.E., “Sale in Market Overt” (1960) 9 Int. & Comp. L.Q. 24, at 32–34Google Scholar; Hebert, P.M. & Pettway, J.R., “Sales of Another's Movables — History, Comparative Law, and Bona Fide Purchasers” (1969) 29 La. L.R. 329Google Scholar; Kozolchyk, B., “Transfer of Personal Property by a Nonowner: Its Future in Light of its Past” (1987) 61 Tul. L.R. 1453, at 1454–1472Google Scholar. This was also the rule according to the Mejelle.

12 Among the few exceptions to this attitude, one might mention South-African law, and other legal systems based on Roman-Dutch law. See Mackeurtan's Sale of Goods in South Africa (Cape Town, 4th ed., 1972) secs. 237-242, at pp. 173–176Google Scholar; Murray, supra n. 11, at 50.

13 For a commentary on this section, see de Martino, F., Del Possesso, in Commentario del codice civile a cura di A. Scialoga e G. Branca, libro terzo: Della Proprieta, art. 1149-1172 (Bologna — Roma, 5th ed. compl. aggior., 1984) 51Google Scholaret seq.

14 The rule is quoted from sec. 2279 of the French Civil Code, where it is explicitly provided. On the French rule, see also parts IIC3(a), IIC3(b)(iii) and IIC3(c) infra.

15 [1961] 1 Q.B. 31, at 73–74Google Scholar.

16 See Murray, supra n. 11, at 37 et seq.

17 See Smith, supra n. 5, at 175-177; Law Reform Committee, 12th Report (Transfer of Title to Chattels), Cmmnd. 2958 (London, 1966) secs. 812, at pp. 5–7 (in England)Google Scholar; “Draft Uniform Law on the Protection of the Bona Fide Purchaser of Corporeal Movables” and “Explanatory Report on the Protection of the Bona Fide Purchaser of Corporeal Movables”, in UNIDROIT, Unification of Law Year-Book, 1967-68 (1969) Vol. 1, p. 141, at 223 (A proposal for a uniform international law)Google Scholar; Scottish Law Commission, Memorandum No. 27 “Corporeal Movables: Protection of the Onerous Bona Fide Acquirer of Another's Property” (Edinburgh, 1976) (in Scotland)Google Scholar.

18 See esp. The Report of the English Committee, ibid.

19 See Planiol, & Ripert, , Treatise on the Civil Law (Paris, 12th ed., 1939, Eng. trans, by the La. St. L. Inst., 1959) Vol. 1, Part 2, secs. 2459-2496, at pp. 452–471Google Scholar; Aubry, & Rau, , Droit Civil François (Paris, 7th ed., 1961, Eng. trans, by the La. St. L. Inst., 1966) Vol. II, sec. 183, at pp. 106–125Google Scholar; Hebert & Pettway, supra n. 11, at 331-335; Franklin, supra n. 8, at 592 et seq.

20 See Benjamin's Sale of Goods (London, 3rd ed., 1987) secs. 453-564, at pp. 277–332Google Scholar; Atiyah, P.S., Sale of Goods (London, 7th ed., 1985) 265–309Google Scholar.

21 For an extensive comparative review of the different rules, see Murray, supra n. 11; Sauveplanne, J.G., “La Protection de l'acquereur de bonne foi objets mobiliers corporels”, UNIDROIT, Unification of Law Year-Book, 1961 (1962) 43et seq.Google Scholar; Ellis, L., “Transfer of Movables by a Non-Owner” (1980) 55 Tul.L.R. 145Google Scholar; Hebert & Pettway, supra n. 11; Report of the Scottish Commission, supra n. 17, the appendix at the end of the memorandum.

22 See sec. 22 of the Sale of Goods Act 1979 (in England). On the Israeli rule, see infra, parts IID, III and IV.

23 See secs. 1036 to 1038 of the Greek Civil Code; Murray, supra n. 11, at 48-49. Sec. 5 of the Israeli Pledges Law, 1967 (21 L.S.I. 44) provides: “Where movable property pledged while in the possession of the pledgor has been deposited as specified in section 4(2) or the pledge thereof has been registered as specified in section 4(3), the pledge shall be effective in all respects even if the pledgor was not the owner of the property or was not entitled to pledge it, provided that the creditor acted in good faith and the property came into the hands of the pledgor with the sanction of the owner thereof or with the sanction of a person entitled to have possession thereof”. On this rule, see Weisman, J., Security Interests Law, 1967, in Commentary on Laws Relating to Contracts, Tedeschi, G., ed., (Jerusalem, 1974, in Hebrew) secs. 28-32, at pp. 148–158Google Scholar. For a criticism on the difference of attitudes in the Sale Law and in the Pledges Law, see Friedmann, D., “Rights of the Owner against a Third Party in Modem Israeli Legislation” (1975) 4 Iyunei Mishpat 245, at 251–255Google Scholar.

24 On the French rules see the references mentioned in n. 19, supra. The relevant provisions in the German Civil Code are secs. 932 and 935. See generally, Beck, C.H., Münchener Kommentar zum BGB (Munich, 1981) Vol. 4, pp. 642-659, 666–670Google Scholar. On the American Law, see Anderson, R.A., Uniform Commercial Code (Rochester and San Francisco, 3rd ed., 1983) Vol. 3, p. 563Google Scholaret seq.

25 Sec Shtruzman, U., Market Overt in Jewish Law, Its Substance, Development and Vitality (Thesis for Second Degree in Jewish Law, Tel Aviv University, 1979)Google Scholar (on the concept ye'ush habealim, “the owner's despair”); sec. 2279 of the French Civil Code; sec. 934 of the Swiss Code of Obligations.

26 See, e.g., sec. 2280 of the French Civil Code; sec. 935(2) of the BGB; sec. 194 of the Japanese Civil Code.

27 See, e.g., sec. 2280 of the French Civil Code; sec. 464 of the Spanish Civil Code, and other laws influenced by Spanish Law, as described in Murray's article, supra n. 11, at 44-47.

28 See, e.g., sec. 194 of the Japanese Civil Code; sec. 10(2) of the Draft Uniform Law, supra n. 17; sec. 34 of the Israeli Sale Law.

29 See Gilmore, G., “The Commercial Doctrine of Good Faith Purchase” (1954) 63 Yale L.J. 1057CrossRefGoogle Scholar.

30 See Band, T. & Posner, A., “Market Overt in a Car Purchase” (1983) 13 Mishpatim 319, at 321–322Google Scholar; Davies, supra n. 8, at 18-19.

31 See, e.g., the Greek Law, supra n. 23.

32 See sec. 10(2) of the Draft Uniform Law and the Explanatory Report, supra n. 17, at 179-181, 227.

33 According to sec. 53 of the Civil Wrongs Ordinance [New Version] (2 L.S.I. [N.V.] 5). On this provision, and on its amendment by sec. 35 of the Sale Law, see Zamir, E., Sale Law, 1968, in Commentary on Laws Relating to Contracts, Tedeschi, G., ed., (Jerusalem, 1987, in Hebrew) secs. 719-723, at pp. 750–753Google Scholar.

34 See sec. 932 of the BGB; sec. 22(1) of the English Sale of Goods Act, 1979; infra, part IV A.

35 See Shtruzman, U., “Market Overt” (1982) 34 HaPraklit 353, at 364 (on the Jewish Law)Google Scholar; sec. 2280 of the French Civil Code; sec. 934 of the Swiss Code of Obligations; sec. 464 of the Spanish Civil Code; sec. 194 of the Japanese Civil Code.

36 See Shtruzman, ibid, at 367, 371.

37 See Friedmann, supra n. 23.

38 For a comparison between the rules, see Shtruzman, supra n. 35.

39 See Barak, A., “Stolen Short-term Loan Bonds: The Right of a Bona-fide Purchaser for Value” (1975) 5 Mishpatim 160, at 163–164Google Scholar.

40 The effect of transfer of rights and payment of price in relation to market overt will be discussed in parts III.H and III.I infra.

41 See, e.g., E.T.C. Self Driving Ltd. v. Abelgon (1974)(ii) P.M. 450; Shetreet v. Car Tours (1979) 33(i) P.D. 331. See also Zamir, supra n. 33, secs. 22-126, at pp. 25-133.

42 On the broad incidence of the Sale Law, regarding the thing sold, see sec. 4(a) of the law; Zamir, supra n. 33, secs. 38-43, 128-130, at pp. 36-46, 137-140.

43 This section was quoted above, supra n. 23. See also Barak, supra n. 39, at 163; Weisman, supra n. 23, sec. 29, at p. 150; Gury, R., “Sale in Market Overt” (1972) 2 Iyunei Mishpat 92, at 107Google Scholar; Kibbutz Glil-Yam v. Sha'atal (1977) 31(i) P.D. 236, at 238-239.

44 See sec. 7(a) of the Land Law, 1969 (23 L.S.1.283); secs. 83,90 of the Patents Law, 1967 (21 L.S.I. 149).

45 See, e.g., Ness v. Golda (1982) 36(i) P.D. 204, at 218-219.

46 See, e.g., Yosef v. Israel Automobile Co. (1973) 27(ii) P.D. 716, at 718.

47 See, e.g., Kibbutz Glil-Yam v. Sha'atal, supra n. 43; Yosef v. Israel Automobile Co., ibid; Band & Posner, supra n. 30.

48 See Barak, A., The Nature of a Negotiable Instrument (Jerusalem, 1972, in Hebrew) secs. 5-7, 77-89, at pp. 24–30, 121–129Google Scholar (The first chapter of this book was translated into English in (1983) 18 Is. L.R. 49, at 53-59); Barak, supra n. 39, at 162-163; Central Co. for Securities v. Engler (1972) 26(i) P.D. 678; Bank Discount L'Israel v. Bank Halva'a Ve-Chisachon L'Israel (1974) 28(i) P.D. 113, at 118-119.

49 See Friedmann, supra n. 23, at 250-251. On the relations between the different exceptions to the nemo dat rule, see also infra part V.

50 Sec. 83 of the Shipping (Vessels) Law, 1960 (14 L.S.I. 60).

51 In England, market overt does not apply to goods belonging to the Crown. See Benjamin, supra n. 20, sec. 467, at p. 287. As for Antiquities, sec. 4 of the Antiquities Ordinance, 1929, laid down that market overt would not apply to them (Laws of Palestine, Vol. I, p. 28Google Scholar; State of Israel v. El Faruk (1978)(i) P.M. 116). However, it seems that this lex specialis has been repealed by the Antiquities Law, 1978 (32 L.S.I. 93), which replaced the Ordinance.

52 For an opposite view, see Band & Posner, supra n. 30, at n. 65, p. 338.

53 This phenomenon is illustrated by the large number of judgments concerning market overt that dealt with the sale of cars. See, e.g., Rosenslreich v. Israel Automobile Co., supra n. 7; Yosef v. Israel Automobile Co., supra n. 46; Simchon v. Radinger (1975) 29(ii) P.D. 610; Auto Belah v. Lucky Drive (1976) 30(ii) P.D. 207; Kibbutz Glil-Yam v. Sha'atal, supra n. 43; Rubinstein v. Alkalay (1977) 31(ii) P.D. 746; Shetreet v. Car Tours, supra n. 41; Con v. Chasson (1981) 35(iii) P.D. 611. See also Shtruzman, supra n. 35, at 369.

54 Sec, e.g., Uniform Motor Vehicle Certificate of Title and Anti-Theft Act, 11 U.L.A. 421 (in the U.S.A.).

55 Sec secs. 2644, 2683 to 2696 of the Italian Civil Code; Tedeschi, G., “Market Overt in a Sale by Agent” (1978) 13 Is.L.R. 258, at 263Google Scholar.

56 This is the prevailing view both in the case law and in the literature. The only decision in which this rule was doubted was severely criticized by scholars. See Con v. Chasson, supra n. 53, at 615; Band & Posnor, supra n. 30, at 329-335.

57 The registration system of vehicles is based on provisions in the Traffic Regulations, 1961 (K.T. no. 1128, p. 1425, reg. 271 et seq.) enacted according to the Traffic Ordinance [New Version] (1 L.S.I. [N.V.] 222). The special disclosure duties were imposed by the Trade in Used Vehicles Law, 1977 (31 L.S.I. 286) and the regulations enacted according to it (Trade in Used Vehicles Regulations, 1978 (K.T. no. 3823, p. 818)). This Law was subsequently replaced by the Consumer Protection Law, 1981(35 L.S.I. 298).

58 See, e.g., Con v. Chasson (1979)(i) P.M. 284, at 289; the arguments of the District Court, as described by the Supreme Court, in Rubinstein v. Alkalay, supra n. 53, at 749-750; E.T.C. Self Driving Ltd. v. Abelgon, supra n. 41, at 459.

59 See Yardeniyah v. Handely (1973) 78 P.M. 149, at 153.

60 See Barak, supra n. 39.

61 See Smith, supra n. 5, at 186-187; Shtruzman, supra n. 35, at 368 et seq.

62 See Shtruzman, supra n. 35, at 371.

63 Compare Kibbutz Glil-Yam v. Sha'atal, supra n. 43, at 239-240; Barak, supra n. 48, at 124.

64 See Bar-Shira, A., “Market-Overt Rule Amendments by the Sale Act, 1968” (1969) 25 HaPraklit 717, at 718Google Scholar; Gury, supra n. 43, at 108; Zeltner, , “On the Sale Laws”, in Collection of the Lectures delivered at the Seminar for Judges 1975: The New Civil Legislation (Jerusalem, 1976, in Hebrew) 79, at 85Google Scholar; Kibbutz Glil-Yam v. Sha'atal, supra n. 43, at 240; Rubinstein v. Alkalay, supra n. 53, at 753; Tedeschi, supra n. 55, at 261-262. In this respect, the Israeli rule is quite different from the English rule. See Benjamin, supra n. 20, secs. 468-469, at pp. 287-288.

65 See Bank Discount L'Israel v. Bank Halva'a Ve-Chisachon L'Israel, supra n. 48, at 118; Delrachim v. State of Israel (1977) 31(ii) P.D. 57, 60, 67.

66 See Bar-Shira, supra n. 64, at 719-721; Rubinstein v. Alkalay, supra n. 53, at 751-752.

67 See Rubinstein v. Alkalay, supra n. 53, at 754 et seq. (per Etziony J.); Auto Belah v. Lucky Drive, supra n. 53, at 212-213, 215-216.

68 Supra n. 53.

69 See Tedeschi, supra n. 55; Barak, supra n. 39, at 163-164; Bar-Shira, supra n. 64, at 720.

70 See sec. 6 of the Pledges Law, 1967.

71 See references in n. 65, supra.

72 The English rule includes many qualifications concerning the time and place of the sale, its open character, and so on. The result of these qualifications, originating in the historical development of the rule, is a drastic reduction in its practical importance. On the English rule and the proposals for its reform, see the Report of the English Committee, supra n. 17, paras. 30-34, 40, and Lord Donovan's reservation, at 13-14, 16-19; Benjamin, supra n. 20, secs. 467-473, at pp. 287-290; Nash, M.L., “Sale in Market Overt” (1976) 126 New L.J. 1195Google Scholar.

73 See Kibbutz Glil-Yam v. Sha'atal, supra n. 43, at 239-240; Rubinstein v. Alkalay, supra n. 53, at 153-154; Yardeniyah v. Handely, supra n. 59, at 153-154; Tedeschi, supra n. 55, at 261-262.

74 For a different view, see Band & Posner, supra n. 30, at 326.

75 See, e.g., sec. 1153 of the Italian Civil Code; sec. 2279 of the French Civil Code; sec. 932 of the BGB; sec. 464 of the Spanish Civil Code. See also sec. 5(1) of the Draft Uniform Law, supra n. 17, at 225.

76 See Zamir, supra n. 33, secs. 393-396, at pp. 402-404.

77 Zamir, supra n. 33, secs. 180-183, 401, at pp. 189-192, 406.

78 On this mode of delivery under the Israeli Law, see generally Zamir, supra n. 33, sec. 183, at pp. 191-192.

79 See Farnsworth, E.A., “Good Faith Performance and Commercial Reasonableness under the Uniform Commercial Code” (1963) U. Chi. L.R. 666, at 667–669Google Scholar; Public Transportation Services Beersheba v. The Labour Court (1981) 35(i) P.D. 828, at 834-835.

80 See the Explanatory Report, supra n. 17, at 169.

81 Shetreet v. Car Tours, supra n. 41 (per H. Cohn J.). See also Rosenstreich v. Israel Automobile Co., supra n. 7, at 713, 715; Auto Belah v. Lucky Drive, supra n. 53, at 216; Dankner v. Pasat & Miterany (1976) 30(ii) P.D. 796, at 804.

82 Sec. 6 of the Sale Law, 1968; sec. 5(a) of the Unjust Enrichment Law, 1979 (33 L.S.I. 44). See also Band & Posner, supra n. 30, at 350.

83 1 L.S.I. [N.V.] 17, sec. 91.

84 See, e.g., Ness v. Golda, supra n. 45, at 212-213 (good faith in sec. 10 of the Land Law, 1969); Public Transportation Services Beersheba v. The Labour Court, supra n. 79; Barak, supra n. 39, at 164.

85 See also Band & Posner, supra n. 30, at 351-352.

86 See, e.g., Zeltner, supra n. 64, at 86; Rabello, A.M., The Law of Obligations — Selected Topics (Jerusalem, 1977, in Hebrew) 175Google Scholar; Gury, supra n. 43, at 107-108.

87 See Rosenstreich v. Israel Automobile Co., supra n. 7, at 715; Shetreet v. Car Tours, supra n. 41, at 333. Sec. 932(2) of the BGB, upon which scholars holding the intermediate position rely, explicitly provides that gross negligence (grobe Fahrlässigkeit) is not compatible with good faith. The Sale Law docs not provide for such a rule, nor does any other Israeli law.

88 See, e.g., Hametprest v. Attorney General (1968) 22(ii) P.D. 536, at 546 (in criminal law); Fiad v. The Custodian for Absentee Property (1966) 20(iv) P.D. 433, at 437 (concerning the validity of transactions made by the custodian in good faith); Kod v. Tel-Hanan (1972) 26(i) P.D. 36 (good faith of the holder in due course of a negotiable instrument); Egozei-Shefa v. Shiber (1985) 39(iv) P.D. 322, at 329-330 (good faith in sec. 9 of the Land Law, 1969).

89 The origin of the doctrine is in English company law. See generally Halsbury's Laws of England, Vol. 7 (London, 4th ed., 1976) paras. 1322-1329, at pp. 887–894Google Scholar.

90 See Band & Posner, supra n. 30, at 336 et seq.

91 See Rosenstreich v. Israel Automobile Co., supra n. 7, at 712-713; Band & Posner, supra n. 30, at 346 et seq. See also Weisman, J., “A Floating Charge Restricting Further Transactions” (1981) 11 Mishpatim 554, at 556–557Google Scholar.

92 Compare, e.g., sec. 5 of the Pledges Law, 1967; sec. 12 of the Movable Property Law, 1971 (25 L.S.I. 175); sec. 28 of the Bills of Exchange Ordinance [New Version] (1 L.S.I. [N.V.] 17).

93 See, e.g., sec. 1153 of the Italian Civil Code; sec. 8(2) of the Draft Uniform Law, supra n. 17, at 227.

94 Compare Weisman, supra n. 23, sec. 31, at pp. 155-156.

95 See infra part III.H.

96 Sec. 2 of the Agency Law, 1965 (19 L.S.I. 231).

97 See Barak, A., Agency Law, 1965, in Commentary on Laws Relating to Contracts, Tedeschi, G., ed. (Jerusalem, 1975, in Hebrew) sec. 90, at pp. 114–115Google Scholar.

98 Ibid.

99 Sec. 8(1) of the Draft Uniform Law (supra n. 17, at 227) takes a stricter position, according to which “the purchaser must be in good faith and so must any person who is acting in his name or on his account”.

100 See, e.g., Yosef v. Israel Automobile Co., supra n. 47, at 717; The Salt Co. v. Netivei Israel (1978) 32(ii) P.D. 696, at 700.

101 See Farnsworth, supra n. 79, at 674.

102 For an application of this criterion, see, e.g., Shetreet v. Car Tours, supra n. 41, at 333. See also Weinberg, supra n. 9; The Trustee for the Property of Paul Abraham v. The Official Receiver (1974)(ii) P.M. 516, at 520; Shachar Zinder v. Jayusy (1978)(ii) P.M. 485, at 494.

103 In Jewish law, he who buys goods from “a famous thief”, cannot rely on the rule of market overt. See Shtruzman, supra n. 25, at 30 et seq. See also Weinberg, supra n. 9, on the different types of sellers of stolen property.

104 See, e.g., Rubinstein v. Alkalay, supra n. 53, at 753.

105 See Central Co. for Securities v. Engler, supra n. 48, at 680-681; The Salt Co. v. Netivei Israel, supra n. 100, at 699.

106 See Central Co. for Securities v. Engler, supra n. 48, at 681. In the rule concerning holding in due course (sec. 28(a)(1) of the Bills of Exchange Ordinance [New Version]), the requirement that the holder got the bill before it was overdue is an objective precondition. On the relation between the rules, see infra part V.

107 See Shetreet v. Car Tours, supra n. 41, at 333.

108 These doubts arise from the judgment of the former President of the Supreme Court (Landau J.) in Con v. Chasson, supra n. 53, at 615-616. For a critical analysis of the judgment, see Band & Posner, supra n. 30.

109 Compare also sec. 12 of the Movable Property Law, 1971 and sec. 5 of the Pledges Law, 1967.

110 See Weisman, supra n. 23, sec. 31, at p. 156; Band & Posner, supra n. 30, at 326, 330.

111 See generally Zamir, supra n. 33, secs. 7, 624 at pp. 12, 656-657.

112 This is the accepted rule in Anglo-American law, as opposed to rules based on the continental approach, such as sec. 5 of the Pledges Law, 1967 or sec. 13 of the Contracts (General Part) Law, 1973 (25 L.S.I. 117). See also Friedmann, supra n. 23.

113 Sec sec. 1 of the Sale Law, 1968.

114 On the rule in the law of bills of exchange, see Sussman, Y., The Law of Bills of Exchange, (Jerusalem, 6th ed., 1983, in Hebrew) secs. 228-230, at pp. 280–285Google Scholar.

115 See, e.g., sec. 22 of the English Sale of Goods Act 1979.

116 Compare sec. 3-303(a) of the UCC with secs. 2-403(2) and 1-201(9) of the same code.

117 If the seller himself can rely on market overt, due to the circumstances in which he obtained the goods, or if he can rely on any other rule by which the rights of the original owner have expired, then there is no need to rely on market overt in the transaction between the seller and the buyer. See also infra part IV.B.

118 See infra parts II.C3(c) and II.D.

119 See Zeltner, supra n. 64, at 85; Band & Poaner, supra n. 30, at 327.

120 E.T.C. Self Driving Ltd. v. Abelgon, supra n. 41, at 454. Bejski J. ruled: “I find nothing in the Law to prevent the application of sec. 34 to a transaction in which the price or part thereof is to be paid with extension”. In Benei Pipshkovitz Co. v. Avni Yitzhak Co. ((1981) 35(iv) P.D. 169, at 176) S. Levin J. said that the matter requires further consideration. As a possible solution he mentioned the rule adopted in the Law of Bills of Exchange, i.e., that the buyer would receive part ownership in the goods, proportionate to the value he had already given.

121 See, inter alia, Zeltner, supra n. 64, at 85; Gury, supra n. 43, at 105 et seq.; Kibbutz Glil-Yam v. Sha'atal, supra n. 43, at 240-241.

122 Referring to the English approach, Prof. Smith remarks (supra n. 5, at 182):

“English lawyers seem to think in terms of a hierarchy of better rights of possession and to be little concerned with the right of ownership at all. I must confess that this approach troubles me intellectually, and conjures up in my mind the image of ghostly rights denied for ever the peace of ultimate union with ownership — or the image of voracious fish or insects of various species preying upon each other throughout eternity”.

123 See Bar-Shira, supra n. 64, at 724.

124 See also Sussman, supra n. 114, secs. 231-232, at pp. 285-288; Barak, supra n. 48, secs 42-43, at pp. 78-80.

125 See Bar-Shira, supra n. 64, at 725; Barak, supra n. 48, sec. 43, at pp. 79-80.

126 See Bar-Shira, supra n. 64, at 725.

127 See generally Zamir, supra n. 33, secs. 349-367, at pp. 359-380.

128 Supra n. 53. See also Abelgon v. Dan (1974)(ii) P.M. 460, at 465.

129 See Staudingers Kommentar zum BGB (Berlin, 12th ed., 1978) Vol. II, sec. 434, p. 112Google Scholar; Benjamin, supra n. 20, sec. 237, at p. 153. A similar view has been expressed concerning sec. 52 of the Uniform Law on the International Sale of Goods (ULIS) of 1964. See Graveson, R.H., Cohen, E.J. & Graveson, D., The Uniform Laws on International Sales Act, 1967 (London, 1968) 83Google Scholar.

130 See Friedmann, D. & Zaltzman, N., “Market Overt and its Influence on Seller-Buyer's Relations” (1976) 5 Iyunei Mishpat 122, at 125–127Google Scholar.

131 See Zamir, supra n. 33, secs. 354-357, at pp. 364-368.

132 In the words of the Magistrates' Court in the Simchon case, as described in the judgment of the Supreme Court, supra n. 53, at 614.

133 See Friedmann & Zaltzman, supra n. 130, at 126.

134 See Zamir, supra n. 33, sec. 352, at pp. 362-363.

135 See secs. 31, 49-55 of the Civil Wrongs Ordinance [New Version]. According to secs. 8 and 13(a) of the Movable Property Law, 1971, the owner of goods or of any right therein has proprietary remedies against any person who violates his rights. However, assuming the buyer obtained a clean title to the goods through market overt, the original owner must settle for damages in torts from the seller and whoever preceded him in the chain of transactions.

136 See generally Friedmann, D., The Law of Unjust Enrichment (Jerusalem, 2nd ed., 1982, in Hebrew) secs. 679-680, at pp. 626–627Google Scholar.

137 25 L.S.I. 178. Sec. 34A provides:

“Where any property is sold by a court, an execution office or any other lawful authority, ownership passes to the buyer free of every mortgage, attachment and other right in the property, except a right which according to the conditions of the sale is not terminated and a right which does not serve as security for a monetary obligation”.

Sec. 34B provides:

“Any charge, attachment or other right in the property which serves as a security for a monetary obligation and is not under section 34 or 34A to be enforced against the buyer shall apply to the proceeds of the sale”.

On this amendment see generally Zamir, supra n. 33, secs. 691-696, at pp. 720-728.

138 On the sphere of application of those two provisions, see Zamir, supra n. 33, secs. 697-706, at pp. 729-737.

139 It should be noted that this analysis is not the only one proposed in the legal literature. The clumsy drafting of the two provisions and the misleading explanatory notes to the Movable Property (Supplementary Provisions) Bill, 1970 (H.H. no. 882, p. 165, at 169 in which the wording of those provisions was substantially different), have resulted in a diversity of views regarding the purpose and meaning of those provisions. According to the prevailing view, the purpose of the law is to provide a special “market overt” rule to the sale by official authorities. See, inter alia, Weisman, supra n. 23, sec. 70c, at pp. 332-337; Friedmann, supra n. 23, at 247; Procaccia, U., Bankruptcy Law and Civil Legislation in Israel (Jerusalem, 1984, in Hebrew) 35–36, 115–116Google Scholar.

140 See generally Friedmann, supra n. 23.

141 See Bank Discount L'Israel v. Bank Halva'a Ve-Chisachon L'Israel, supra n. 48, at 119; Elimelech v. Israel Bank (1979) 33(iii) P.D. 596, at 599; Barak, supra n. 39. For a different view regarding the relations between market overt and parallel rules in the Bankruptcy Ordinance [New Version] (3 L.S.I.[N.V.] 131), see Procaccia, supra n. 139, at 112 et seq.