Rule of Nemo Dat Quod Non Habet

RULE OF NEMO DAT QUOD NON HABET

Nemo Dat Quod Non Habet the Latin maxim simply means that ‘No one gives what he does not have.’ Latin maxims have a personifying attribute in the legal systems thus substituting various universal principles. This Latin maxim ascertains various rights associated with possession, ownership, property, transfer of goods which are subsumed with respect to transfer of title.

MEANING OF NEMO DAT QUOD NON HABET

Nemo Dat Quod Non Habet is associated with the transfer of possession in Sale of Goods Act, 1930. This principle is related to the phrase of “first in time is first in right.” The nemo dat principle rests on the vision of chain of transactions for which it would be practicable to trace the ownership through a series of legitimate transactions for the acquisition of the goods.

In one of an ancient case, Greenwood vs. Bennett (2003), the original owner of the car the defendant entrusted his car with a man named Searle for repairs of the car. Searle used the car for personal purposes subsequently destroying the vehicle through a crash causing tremendous damages. He sold the car to a third person the garage owner Harper at £75 of which Harper was unaware that Searle was not the owner of the car. Harper had to spend £226 for the repairs of the car and then selling it to the finance company.

The Court held that the plaintiff as the owner of the car and Searle had no right to transfer the title to Harper and subsequently Harper could not transfer the title to the finance company because he was also not the rightful owner. Thus plaintiff got back his car though he had to repay the expenses occurred in the event for the car repairs.

SECTION 27 OF THE SALE OF GOODS ACT

Section 27 – Sale by Person not the Owner
Section 27 of the Sale of Goods Act is concerned with the transfer of possession which states that sale of goods by a person who is not an owner without the consent by the owner would leave the buyer with equivalent rights to that of seller, thus protecting the interest of the owner and the buyer acquiring no better title than the seller has to the goods.

This rule essentially implies that the buyer acquires no superior title to that of the seller thus if the title of the seller is defective, the buyer would also possess a defective title. For instance, if a thief in the process of disposing the theft goods sells the same to a person, the buyer who acquires such goods has the same title as that of the seller.

Likewise, the registration of a motor vehicle in the name of a particular person under the Motor Vehicles Act is not conclusive evidence of the fact of ownership.

In Life Insurance Corporation vs. United Bank of India Ltd. and Anr.

The Court held that an actionable claim can only be transferred only by the person who has the possession of the title to the property in respect of which claim lies.

Exceptions under Sec 27 to Nemo Dat Quod Non Habet

1. Transfer of Title by Estoppel
   

   Sec 27 states that“Unless the owner of the goods is b conduct precluded from denying the seller’s authority to sell the goods.”

   When the owner of the goods is not permitted to deny the seller’s authority is termed an estoppel against him.  Estoppel in contracts arises from a representation that the seller has the authority to sell. An omission to act upon or performs one duty which is a legal obligation may create an estoppel.

   Estoppel by negligence

   Mere recklessness or carelessness may not create an estoppel. Failure to register a transaction where the registration is compulsory may give rise to an estoppel. Thus a negligence to conduct own affairs and duty as a part of legal obligation may give rise to negligence.

   In Shaw and Anr. vs. Metropolitan Police Commissioner,

   The claimant wishing to sell the car permitted a dealer who promised to sell the car to hold possession. The claimant clearly made a representation to the dealer to not sell the car thus helping to be estopped from claiming the return had the contract between owner and dealer not stated.

2. Sale by Mercantile Agent
   

   A buyer of goods from a mercantile agent acquires good title if the mercantile agent with the consent of the owner is in possession of the goods provided that the buyer is acting in a good faith and has not at the time of the sale notice that the seller has no authority to sell.In Commonwealth Trust Ltd. s. Akotey,

   A certain quantity of cocoa was consigned by the railway to merchant for which the consignment notes was already received. The consignor believed that the merchant would buy at the agreed price and the merchant disposed the goods by transferring the consignment notes thus enabling the buyer tom acquire a good title.

3. Sale by a Joint owner
   

   Sec 28 states thatIf one of the several joint owners of goods has the sole possession by the permission of the co-owners, the goods transferred to any person buying it in good faith and at the time of sale do not observe the seller has no authority to sell.

4. Sale by person in possession of the voidable contract
   

   Sec 29 states thatWhen the seller of goods has obtained the possession thereof under a contract voidable under Section 19 of the Indian Contract Act, but if the contract has not been rescinded at the time of sale,

   The buyer acquires a good title if the buyer notices no defect in the seller’s title and the purchase is made in good faith.

5. Seller in possession after sale
   

   Sec 30(1) states thatThe seller should be in in the possession of the goods after having sold to them to the buyer then the buyer gets a good title if the delivery or transfer by that person or by a mercantile agent acting for him of the goods or documents of title under any sale, pledge thereof receiving in good faith and without the notice of defect from that of seller.In Pacific Motor Auctions (Pty) Ltd. vs. Motor Credits Ltd.,

   1. Co. purchased from a motor dealer a number of cars and allowed them to remain in the showroom of the dealer for the purposes of display and sale t customers on hire purchase. M, Co. subsequently terminated the dealer’s authority to sell. The dealer sold them to a bona fide buyer which was held as a good title.

6. Buyer in possession before sale

Sec 30(2) states that

A person who has bought or agreed to buy certain goods of which the possession of the goods is already given to him, but the seller has some right or lien over the goods, the second buyer will get a title free from the seller’s right of lien.

In Newtons of Wembley Ltd. vs. Williams,

A car was sold and delivered on terms that the property would not pass until the paid or cheque honoured, subsequently the cheque was dishonoured. The seller cancelled the sale but the buyer resold the vehicle in a second hand car market to the buyer who further sold it to another person.

The last person was held to have procured a good title.

 

Author: Aathira Pillai,
Dr. D. Y. Patil College of Law, BLS LLB 4th year