"NEMO DAT QUOD NON HABET"(NEMO DAT RULE)

‘Nemo dat quod non habet’

is a Latin phrase used to express the general rule of ‘no one can give what one
does not have’. The general rule is that one cannot give away the property that
he does not own to others unless the owner has granted the authority upon
him to do so. It originated from the old common law rule in the English laws.
In sales of goods, most cases usually takes place between the buyer and
either the owner of the goods or his/her authorised agent. However, there
are cases in which a seller of goods may purport to sell the goods which
he or she may not have any right to sell (where the seller is not infact the
owner of the good nor an authorised agent at the time of sale. Such
situation may come in cases where the person selling is athief who has
stolen the goods or is arogue who has fraudlently acquired goods or has
impersonated the owner of goods and in such asituation where abuyer
honestly believes to be the owner of the goods but actually he/she has
been moled by apurported seller.
In such situation the buyer of such goods does not acquire a title to the
goods and this lead to the general rule of transfer of title which is
expressed in latin maxim to apply to sale of goods as "nemo dat quod non
habet (nemo dat rule)": which mean that aperson cannot give that which he
does not have or that no one can transfer /pass abetter title than he/she
possess. In legal terms, it means that a purchaser of goods cannot acquire legal
title to those goods if the seller did not have title to pass. This concept
underpins rules around the transfer of ownership and title for goods in
commercial transactions. It aims to prevent the trafficking of stolen or illegally
obtained goods.

The Basic Rule of Transfer of Title

The nemo dat rule sets up the basic principle that a seller of goods must have
legitimate ownership and the legal right to transfer title to a purchaser. If a
seller does not actually own the goods they are purporting to sell, the buyer
cannot acquire valid title to the goods
This protects buyers from unknowingly purchasing illegally obtained goods,
while also aiming to prevent theft by ensuring thieves cannot pass on lawful
ownership.

The Importance of Nemo Dat Quod Non Habet in Commercial Law

The nemo dat principle is essential for maintaining confidence in commercial
transactions involving the sale of goods. It upholds the integrity of contracts
and property rights by invalidating transactions where the seller lacked the
right to sell the goods they purported to own.

However, there are some notable exceptions and defenses which limit the rule,
such as sellers who can pass good title to innocent buyers under certain
circumstances. Understanding when nemo dat applies and when exceptions
may limit its application is key for buyers and sellers of goods

This maxim has been incorporated into eery contract of sale of goods under S
29(1) of Sales of Goods and Supply of services Act 2017 which provides that
"where goods are sold by a person who is not the owner of the goods and who
and who does not sell them with the consent or authority 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/her conduct precluded from denying the sellers authority
to sell".
This was expounded in the case of CUNDY V LINDSAY (1878)HL Whose facts
were Blenkiron who was a well and a respected firm who carried on business at
123 wood street cheapside.Arogue called Blenkarn from 37 wood street
impersonated Blenkiron firm at the neighbouring firm and ordered a quantity
of Linen from Lindsay who sent the linen on credit believing they were dealing
with the firm of Blenkiron,Blenkarn (the rogue) after receiving the linen sold
some to Cundy. Lindsay brought a claim in conversion against Cundy. The
House of Lord held that the contract of sale between the Lindsay and the rogue
was void for mistake and consequently because the rogue had no title of goods
to pass to Cundy , The Lindsay claim would succeed.

Because of the nemo dat rule there always arise cases of conflict in interest
between the original owner of the goods who is seeking to recover the goods or
the value and the ultimate buyer who has paid good money for goods which
he /she believed thebseller was entitled to sell.

Therefore with the development of laws, The common law case of

Bishopsgate Motor Finance Corporation v Transport Brakes
Ltd(1959)KB322.Lord Denning in upholding the right of the owner to his
property on one hand and protecting the interest of the purchaser on the other
side stated that the two principles have to be striven for mastery.
The first is for protection of property ie "No one can give abetter title than he
or she posses.
The second principle was for protection of of commercial transaction that the
person who takes/buys the goods in good faith for value with out notice should
get a better title

EXCEPTION TO THE NEMO DAT QUOD NON HABET(NOME DAT RULE).

Because of the harshness of "nemo dat" rule very many exceptions to the rule
were developed at the common law and the same have been expounded and
provided for by the Statutes.
Prof. Ben Kiromba Twinomujuni in his book E book Ben IEL Contract 2
chapter 4 pg 235 at para 752 stated that all exception to the nemo dat rule
will only apply in favour of a person( abuyer) who has bought the goods in
good faith without notice of the of original owner and they include;

(a) ESTOPPEL

The doctrine of estoppel is to the effect that the original owner of goods is
prevented from denying the trueth of any kind.

According to Section 29(1) of Sales of Goods and Supply of Services Act 2017
the owner of goods is precluded by his or her conduct from denying the sellers
authority to sell. Prof.Ben Kiromba Twinomujuni in his book E book Ben IEL
Contract book2 chapter 4 pg 235 para 752 stated that "precluded" in the above
section of SOG and SOS Act 2017 is equivalent to the word estopped.
In applying the doctrine of estoppel in the nemo dat rule it seems that there
should be a representation to the buyer or to the whole world at large that
aperson is for example the owner's agent to sell the goods or a representation
from the owner that he or she is the owner of goods.
A representation may be by the owners word or conduct or by his neglegent
failure to act which allow the seller to appear as the owner of oe as the having
the owner's authority to sell the goods as in the case of Shaw v Commissioner
of Metropolitan Police (1987)1 WLR 1332 where the plaintiff agreed to buy acar
from one L who had obtain it from the true owner together with certificate
signed by him ssying he had sold the car to L which in fact was untrue as the
owner of the car had not sold the car to L, he had merely authorised L to sell it
on his behalf and L was actually aswindler who did not pay for the car and
when the title of the car brought suspicion ,L disappeared and left the car and
another person claimed they had acquired the title.the police impounded the
car.
Both Shaw and the owner of the car claimed ownership where the owners
claim was basing on nemo dat rule and Shaw was basing that the owner was
estopped by his word and conduct.
Court held that the owners conduct amounted to representation that L was the
owner of the car and was estopped because of the certificate of title and signed
document of title given to L.
Also in the case of Mercantile Credit Co. Ltd v Hamblin (1965)2 QB 242 the
court held that the negligent signiture of the owner on the document of title
can only give rise to an estoppel if the signer owned a duty of care ,the signer
breached that duty and and that the negligence was the proximate cause of
the loss.

b) SALE BY AGENT
Where the sale is by agent, It will bind the principal (the owner) if the agent
had actual ,apparent or usual authority from the principal.
The Sales of Goods and Supply of Services Act 2017 under Section
29(1)provides that if the goods are sold without the authority or consent of the
owner ,the buyer acquires no title.
In any case the agent should be in the possession of the goods with the
principal consent however the owners evidence is presumed to be true where
there is no evidence to the contrary.
In such relationship of agency ( agent and principal) the owner of the goods
who has appointed the agentbis estopped from denying the agents authority to
sell.
The sale by agent was expounded in the case of Pearson v Rose and
Young(1951)1 KB 278. Where an agent abtained the registration by tricking the
owner into leaving them with the car behind,He then sold the vehicle.
The court held that seller had possession of the goods in his capacity as an
agent but with out the consent of the owner and therefore agent was unable to
pass the title to the buyer.

c) SALE UNDER VOIDABLE TITLE.

Another exception of nemo dat rule is sale under voidable title which may rise
where the contract of sale is induce for example by fraud ,the contract would
be void but incase its voidable it can be set aside by the party who has been
deceived.
The common law rule is that aperson cannot avoid avoidable contract to the
prejudice of the third party rights acquired in good faith and for value as
provided for under Section 30 of Sales of Goods and Supply of Services Act
2017 that when the seller of goods has avoidable title to the goods ,but his or
her title has been voided at the timebof sale, the buyer who acquires the good
title to the goods if he or she buys them in good faith without notice of the
sellers defect in title.
The practical importance of this rule is that,if a person buys goods by "fraud"
and disposes them before the other party avoids the contract abuyer in good
faith for value without notice from the fraudelent party acquires a good title.
In the case of Car and Universal Finance Ltd v Coldwell (1965)1QB 525 the
court held that the seller should take the necessary steps to rescind the
contract by communicating for example by informing police.

(d) SALE BY A SELLER IN POSSESSION.

The Sale of Goods and Supply of Services Act 2017 Section 32(1) provides for
the exception of nemo dat rule and to the effect states that where a person who
has sold the goods continues or is in possession of the goods or of the
document of title to the goods ,the delivery or transfer by that person or by an
agent acting for him or her of the good or document of title under sale,pledge or
other disposition of the goods to any person receiving them in good faithwith
out notice of the previous sale shall have the same effect as if aperson making
delivery or transfer were expeessly authorised by the owner of the goods to
make the delivery or transfer.
The section was expanded in the case of Worcester Works Finance Ltd v
Cooden Engineering Co Ltd (1972)1 QB where the court held that the goods or
document of title should bevdelivered or tranfered to the second buyer if he
/she is to abtain a title binding on the first buyer and to constitute disposition
there must be tranfer of an interest in goods by the owner but not mere
transfer of possession.

(e) SALE BY BUYER IN POSSESSION.

The exception of the nemo dat rule of sale by buyer in possession is provided
for under section 32(2) of Sales of Goods and Supply of Services Act 2017 as
where a person who has bought or agreed to buy goods abtains with the
consent of the seller ,possession of goods or the document of title to the
goods ,the delivery or transfer by that person or by an agent acting on his or
her of the goods or document of title ,under any sale ,pledge or the disposition
of them ,to any person receiving them in good faith and without notice of any
lien or other right of original seller in respect of goods shall have the same
effect as if the agent is in possession of the goods or document of title with the
consent of the owner.
According to the case of Lee v Butler (1893) 2 QB 318 ,the courtvheld that the
provison under s 32(2) of SOG& SOS Act 2017 is equivalent to aperson who
bought the goods and the buyer is in possession of the goods and the goods
agreed to be bought under agreement to buy the good and pay for them in
instalment.

It was also expounded further in the case of Cahn v Pockett's Bristol Channel
Steamer Packet Co. Ltd.: C forwarded to X, a foreign purchaser, a bill of
exchange drawn on X for acceptance. Without accepting the bill of exchange X
transferred the bill of landing to P for value. It was held that P had acquired a
good title as X had obtained possession of the bill of lading with C's consent.

(f) SALE UNDER SPECIAL COMMON LAW OR STATUTORY POWER OR COURT

ORDER.
According to Sales of Goods and Supply of Services Act 2017section 29(2)(a)
and (b) provides that the Act shall affect any enactment enabling the apparent
owner of goods to dispose them as if he or she were the true owner of the
goodsand the validity of any contract of sale under any special common law or
statutory power of sale or under the order of the court of competent jurisdiction
.
At Common law apledgee can pass agood title if the pledgor defaults and a
mortgagee too can do so.
Persons having statutory powers include Landlords,bailees and unpaid sellers.
In cases the goods are perishable ones or the ones liable for attachment and
sale ,the court can order for the sale of such goods since it has powers to do
that as provded for under section 33(1) of Sales of Goods and Supply of
Services Act 2017 that a warrant of attachment or other warrant of execution
against goods shall bind the property in the goods of the execution debtor as
from the time the warrant is delivered to the bailiff to be executed.

Inconclusion therefore,the nemo dat quid non habet (nemo dat rule) is a
principle of law that aseller can not sell or transfer the title of what doesnot
belong to him or her or what he does not possess .under common law the
innocent third party who could buy such good would suffer losses ,so due to
such harshness of of the nemo dat rule ,the Common law and Statutory
provisions have provided remedy/ exception to the nemo dat rule to the
innocent third party who acquires the title of goods in good faith without notice
of the defect of the seller and they includes ; Estoppel, Sale by voidable title,
Sale by agent, Sale by the seller in possession, Sale by the buyer in possession
and Sale under special Common law,Statutory power or Court order.

REFERENCE .
Sales of Goods and Supply of Sevices Act 2017.
Atiyah and Adams Sales of Goods 13th edition Chapter 15.
Ben Kiromba Twinomujunu E book IEL Contract book 2
Case law and Common law principles on Transfer of Title under Aales of Goods

Lord Dening in the case of Bishopgate motor Finance Corporporation