The core provision here, (6) is that where a mercantile agent is, with the consent of the owner, in possession of goods or of the documents of title of goods, any sale, pledge or other disposition of the goods made by him when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner to make the disposition provided that the person taking the goods acts in good faith and without notice that the mercantile agent was not authorised to effect the transaction.
The question was whether, since the gallery owner was held to be a mercantile agent, he had given a good title to the purchaser of the gallery for those pictures which belonged to the consigning artists.
The judge, Forsyth J., cited Alberta legislation, (12) which followed the language of section 2 of the Factors Act 1889 and held that the new owners did not get good title to these pictures, since in selling the entire business and stock-in-trade the former owner had not been "acting in the ordinary course of a business of a mercantile agent" as required by the statutory language.
It was held that breach of a particular usage of trade ,that diamond brokers did not pledge gems, did not exclude the mercantile agent from acting in the ordinary course of business as s.
Manufacturers and wholesalers no longer employ mercantile agents as distributors, but outright purchasers, who may be colloquially termed 'agents' but have none of the legal powers of a true agent.