The Sale of Goods Act of 1930 had a major impact on the contracts established

with both buyers and sellers of goods because it established a number of new
principles and rules to safeguard both buyer and seller’s rights. Section 18 to 30 of
the Sales of Goods Act specifically address the contract’s effects on the transfer of
property between the seller and the buyer. One of the principles is Nemo Dat
Quod Non-Habet, which literally translates to no one gives what he does not
have.

The Nemo dat quod non-Habet is important in determining the rights to

ownership, possession, property, and commercial goods that are covered by
contract law when it comes to title transfer. The usage of the Nemo Dat Quod
Non-Habet rule in current laws, as well as exceptions to the rule, are the subject
of this critical essay.

Nemo Dat Quod Non-Habet

Section 27 Sale by person, not the owner Subject to the provisions of this Act and
of any other law for the time being in force, where goods are sold by a person
who is not the owner thereof and who does not sell them under the authority or
with the consent of the owner, the buyer acquires no better title to the goods
than the seller had, unless the owner of the goods is by his conduct precluded
from denying the seller’s authority to sell.

Where a mercantile agent has possession of the goods or a document of title to

the goods with the consent of the owner, any sale made by him in the ordinary
course of business of a mercantile agent shall be as valid as if he had been
expressly authorized by the owner to make the sale, given that the buyer acts in
good faith and has not received notice from the seller that he or she does not
have authority to sell at the time of the contract of sale.

Basically, Section 27 attempts to protect the true owner’s interests by stating that
:- When goods are sold by someone who is not the owner and who does not sell
them under the authority or even with the knowledge of the client, the buyer
inherits no better ownership of the goods than the seller.

The case of Greenwood v Bennett[1]. In this case, the rightful owner of a Jaguar
car (Bennett) assigned it for repairs to a man named Searle. Searle then took the
car and used it for his own purposes, crashing it and causing significant damage.
For 75 pounds, Searle sold the car to Harper, who owned a garage. Harper had no
idea that Searle was not the car’s owner. Harper then invested 226 pounds on
repairs before selling the car to a mortgage lender.

The court determined that the car belonged to Bennett because Searle did not
have title and thus could not transfer it to Harper. Harper was unable to transfer
title to the finance company for almost the same reason. Bennett was able to
restore the car, but he also had to pay Harper for the stuff he’s done to it.

The case of Life Insurance Corporation vs United Bank of India Ltd. And Anr[2], the
Indian court held that while an actionable claim is transferable under Indian law,
it can only be transferred by the person who owns the property on which the
claim is based. And this is same in English law also.
No one gives what he does not have, according to Nemo rule, if the nominee has
no right, title, or interest in the policy money, he cannot surrender the policy or
assign any right, title, or interest in the policy money. The right of a nominee is
merely a right to collect the proceeds of the policy in the eyes of the statute, and
the right has been granted only to avoid the inconvenience of obtaining
representation for the estate of the deceased policy-holder or a succession
certificate.

Exceptions to the Nemo dat quod non habet rule

•Sale under the authority of the owner:
•Misleading conduct of the seller:
•Sale by a mercantile agent:
•Sale under any Special Common Law or Statutory Power of Sale:
•Sale in a market overt:
•Sales under a voidable title:
•Sale by a seller in possession of goods:
•Sale by a buyer in possession of goods:

Doctrine of Caveat Emptor

Introduction
Technological revolution and globalisation have led to a significant increase in the
number of commercial transactions. The purchasing power of the consumers has
increased manifold resulting in a large number of retail purchases. Laws have
been enacted to make it mandatory for manufacturers to display the description
of the product on the packaging cover. While the consumers have the right to
inspect the description of the product before making the purchase, there are
instances where the product conforms to its description but turns out to be of
inferior quality and incapable of fulfilling the purpose for which it was purchased.

The issue that arises in such cases is whether the consumer has the right to return
the inferior quality product or whether he is to bear the loss himself. The doctrine
of caveat emptor states that the consumer takes a risk of quality and
effectiveness when he purchases a product and if the product does not meet his
expectations, then the consumer will himself be responsible for the inferior
quality product. The consumer is expected to make a reasonable examination of
the product’s quality and condition before making the purchase.

However, with time, the doctrine of caveat emptor was substituted by the
doctrine of caveat venditor. Thus, there was a paradigm shift from ‘let the buyer
beware’ to ‘let the seller beware’. This substitution was necessitated due to the
changed circumstances of the modern world. The principle of caveat emptor is no
longer applied by the judges who are now more inclined towards safeguarding
the interests of the consumers.

The doctrine of caveat emptor evolved several decades ago and became a part of
the common law. However, with the growth of trade and commerce, several
exceptions to this principle were recognized by the policymakers.. Gradually, the
exceptions became more prominent and significant than the rule itself.

Basis of the doctrine of caveat emptor

The doctrine of caveat emptor is based on the principle that consumers should
fully examine the products before making the purchase. They should be satisfied
that the product will meet their expectations. They will have no recourse against
the seller if the products fail to stand up to their desires. The doctrine of caveat
emptor is essential to balance the information asymmetry that exists between the
buyer and the seller. The seller generally has more about the defects and
potential lapses of the product than the buyer.

The analogy behind the formulation of this doctrine is that consumers should be
aware of their rights and should carry out reasonable examinations before
purchasing any product. This principle thus puts the onus on the consumers to
protect their rights. Consumers are expected to analyse and examine a product
using their independent judgement and skill.
The doctrine of caveat emptor is often applied to public auctions. Thus, if any
property or product is purchased in a public auction, it is purchased with the
underlying implication that the buyer will have to take care of any deficiencies
and litigations attached to the product or property.

Contract of sale
The doctrine of caveat emptor is fundamentally related to the contract of sale.
The contract of sale establishes the relationship between the buyer and the seller
and the doctrine of caveat emptor is aimed at protecting the seller from liability

Exceptions to the rule of caveat emptor

Fitness for buyers’ purpose [Section 16(1)]
Sale under trade name [Proviso to S. 16(1)]
Merchantable quality [Section 16(2)]
Examination by buyer [Proviso to S. 16(2)]
Conditions implied by trade usage [Sec. 16(3)]

Why has the doctrine of caveat emptor lost relevance?

In the 20th century, there was a paradigm change and the focus shifted to the
rights of the consumers. The relevance of the doctrine of caveat emptor faded
with the realisation that it is not possible for consumers to examine and identify
all the latent defects of the products at the time of purchase. Moreover, the seller
should not be allowed to unfairly enrich themselves at the cost of the buyer.

At the time of the evolution of the doctrine of caveat emptor, limited types of
products with largely identical traits were sold. However, the markets of today
are filled with various types of goods which have distinct qualities. Thus, it is not
fair to expect the consumers to examine all the different and distinctive products.