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Selling An Item One Does Not Own

May I sell an item that is not in my ownership?

The seller must own the item in question, because a sale is effectively the transfer of ownership, where ownership is measured by risk liability, not necessarily by physical possession. One party may possess an item physically, such as a leased car, and not own the risk, while another may own an item's risk, such as a stock transacted over the Internet, and not possess it physically. The seller must possess the entire portion of the risk liability of an item before its sale. If the item is being used as collateral for a separate contract, the seller must obtain prior approval for the sale from the party for whom the collateral is put up.

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