Exceptions to the rule “nemo dat quod non habet”

With reference to the Sale of Goods Act, or the equivalent law on the sale of goods in your country: Explain the meaning of the rule “nemo dat quod non habet” and Discuss four exceptions to the rule in the rule

Nemo dat quod non habet

  • The nemo dat rule is that the transfer of goods cannot pass a better title than he himself possesses. In simpler terms one cannot give what he/she does not have.
  • The principle of Nemo dat was developed by the common law to protect the true owners of goods. However its strict application interferes with commercial transactions in that the bona fide purchase cannot have a good title if the seller has none.

 

Exception to the rule

  • Estoppel: A non-owner can pass a good title if the true owner is by his conduct precluded from denying the seller’s authority to sell. This is the equitable doctrine of estoppel. If the true owner makes it appear that some other person is the owner, the true owner is estopped from denying the apparent ownership of the other.
  • Resale by seller in possession: If the seller who has already sold goods but retains their possession or documents of title, sells them to a 3rd party who takes in good faith for value without notice of the previous sale, the seller passes a good title.
  • Sale by buyer in possession: Where seller who has bought or agreed to buy goods, obtains their possession or documents of title with the seller’s consent before title passes to him and as a consequence he transfers them to above fide purchaser who takes him in good faith and with notice of the ‘original seller’s lien on the goods, he passes a good title.
  • Sale under statutory power: A sale made in exercise of a power conferred by an act of parliament passes a good title.
  • Sale by mercantile agent or factor: A factor is a mercantile agent who is entrusted with possession of goods and who sells in his own name, a factor passes a good title, even if he has no authority to sell provided he sells the goods;
    • In his capacity as mercantile agent
    • In the ordinary course of business
    • To a bonafide purchase for value without notice
    • Of which he has possession of with the owner’s consent



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