Nemo dat quod non habet.

Explain with exceptions

INTRODUCTION

The process by which ownership goes from one party to the other is referred to
as “Transfer of property as between seller and buyer”. Nemo dat quod non
habet, literally meaning “no one can give what they do not have”, is a legal rule,
sometimes called the nemo dat rule, that states that the purchase of a
possession from someone who has no ownership right to it also . denies the
purchaser any ownership title. This is a legal rule which states that purchasing
a property from someone who doesn’t have a title denies the purchaser of the
property of an ownership title also. In simple words, if someone gets something
because it was transferred to him- as a bequest, sale, gift, etc., he will only
have that title which the previous owner had and nothing more. The transferee
derives his title from the transferor. This is also known as the derivative
principle. The legal rule is also connected to the principle of “first in time is
first in right.”

A transfer his property to B, further, A transfer the same property to C,

following the rule of Nemo Dat Quod Non Habet, B will get the right from A ,
thus, currently , B has the rights and A has none, so A cannot transfer
property to C. The current owner should be able to trace his rights back in time
to prove his legitimate acquisition. In Nitin Gupta vs. State of Meghalaya and
others, Supreme Court has set aside the release of the stolen vehicle to the
buyer on the principle of Nemo dat quod non-habet.

Nemo Dat Rule in India

Section 27 Of the Sale of Goods Act, 1930 states that when any goods are
sold by a person who is not the real owner of the goods and sells them without
proper authority and consent from the real owner, the buyer acquires no better
title to the goods than the seller had.

Further, Section 27 also provides an exception to the rule. Section 27 can be

considered as a general rule which protects the interest of the real owner. If
there is any defect in the title of the seller, the buyer will also inherit the same
defect from the seller. But, this section does not imply that the buyer title is
always bad. The basic principle of this rule is that the buyer cannot acquire a
better title than the seller. For instance, if a thief sells off the stolen goods, the
buyer will have the same title as the thief who sold him the goods.

Through the judicial pronouncement of Greenwood v Bennett The rule can be

explained. In this case, Bennett was the real owner of a Jaguar car. Bennett
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 gave his car to a man named Searle for repairing work. Searle used the car for
his purpose. While he was using the car, it met with an accident. Searle then
sold the car to a garage owner named Harper for 75 £. Harper did not have the
knowledge that Searle was not the real owner of the car and spent 226 £ to
carry out repair works. He then further sold the car to a finance company. The
Court held that since Searle wasn’t the real owner, he couldn’t transfer the
right to Harper, who in turn couldn’t pass the rights to the finance company.
Bennett was entitled to recover the car.

Although the rule is extremely clear, it isn’t always fair as the innocent buyer
may suffer. When the goods are in question, a buyer may find himself in a very
tough situation. The apparent harshness of the nemo dat rule was realized, and
some exception were provided. The exception applies only to the buyer who has
acquired the goods in a good faith and without having knowledge about the
rights of the true owner.

In India, in the judicial pronouncement of Life Insurance Corporation v

United Bank of India Ltd. &Ors. It was opined by the Court that under
Indian law, an actionable claim can be transferred, but only by the person who
has a right to the property in respect to which the claim lies.

Exceptions

1. Sale under the implied authority of the owner, or transfer of title by estoppel (S.
27)
2. Sale by a mercantile agent (proviso to S. 27)
3. Sale by one of joint owners (S. 28)
4. Sale by a person in possession under a voidable contract (S. 29)
5. Sale by the seller in possession of goods, the property in which has passed to
the buyer (S. 30(1))
6. Sale by the buyer in possession of the goods before the property in them has
passed to him (S. 30(2))
7. Re-sale of the goods by an unpaid seller after he has exercised the right of lien
or stoppage in transit (S. 54(3))
8. Sale by finder of goods (S. 169, Indian Contract Act)
9. Sale by a pawnee when the pawner makes a default in payment (S. 176, Indian
Contract Act)

1. Title transfer by Estopple:

A purchaser can obtain a good title if the owner of the goods is impossible from
refusing the seller's authority to sell by his action, according to Section 27.
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 When the owner is unable to refuse the seller's authority, estoppel against him
occurs. The seller's representation that he or she has the authority to sell
creates estoppel.
Estoppel arises from one of the following:
o An act or omission but it must be a legal obligation.
o Negligence but not just any negligence, but negligence in relation to the person.
The case of K. M. Mohambaram v. Ram Narayan Brahmin.
A was appointed as the bus owner's agent to operate the bus for hire. He left a
signed letter to the District Magistrate requesting that G permit be granted
to A. defrauded the bus owner by altering the letter and addressing it to the
DSP, requesting him to transfer the registration in A's name. A did the same
thing, selling the bus to a third party who had no knowledge of A's authority to
sell. The buyer's title was challenged by the original bus owner. It was decided
that A could not have predicted that he would commit such forgery. He was not
barred from contesting the buyer's title under Section 27 of the SOGA.
2. The Sale by A Mercantile Agent given under Section 27
If a mercantile agent has the authority to sell goods and does so, there is no
problem because, in general, an agent with the authority to sell can convey a
good title. The issue starts when the mercantile operative deprives of the goods
without authorization.
In Folker v. King case, the plaintiff gave his car to a mercantile agent with the
intention of selling it for at least 575 pounds. The mercantile agent, on the
other hand, misappropriated funds by selling them to the defendant for pounds
140. The defendant (a buyer) was found to have good title to the product in a
plaintiff's action.
3. The Sale by joint owner given under Section 28:
If among the many joint owners of goods, gains sole possession of the goods
with the consent of both co-owners, the property in the goods is transferred to
anyone who buys them in good faith from that joint owner without knowing
that the seller lacks authority to sell. If Section 28 had not existed, the
consumer would have received only co-ownership titles and would have been a
co-owner with another co-owner.. As a result, the clause is a legal exception
no one may offer what he does not possess.
4. The Sale by A Person in Possession Under A Voidable Contract under
Section 29:
Contract Act's Sections 19 and 19-A An express that if a party agree to an
agreement is procured through pressure, extortion, error, or unjustifiable
impact, the agreement is voidable.
In the case of Phillips v. Brooks (1919)[5]
A fraud was committed when a person purchased a valuable ring with a
worthless check while posing as a respectable individual. The ring was then
pledged to another person. Following the discovery of the fraud, the question of
whether the pawnee was entitled to keep the ring arose. The pawnee had a good
title to the ring, according to the Court, because he was unaware of the seller's
defective title and acted in good faith.
5. The Sale by The Seller in Possession under Section 30 (1):
The seller is no longer able to deal with the goods once they have been sold and

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 the buyer has taken possession of them. If he retains possession of goods and
deals with them, the buyer will sue him for exchange.
In the case of Staffs Motor Guarantee Ltd v. British Wagon Co Ltd (1934)[6]
A who was the lorry owner, sold his lorry to the defendant. Later, he bought the
lorry on hire-purchase from the defendant and resold it to the plaintiff. The
plaintiff did not have a good title to the lorry, according to the Court, because A
had already sold it to the defendant, and when he sold it to the plaintiff, he did
so as a bailee, not as a seller. As a result, the exception will not be enforced. If
the defendant had sold the vehicle to the plaintiff, the plaintiff would have had
a good title to the vehicle.
6. The Sale by the Buyer in Possession under Sec 30(2)

This section says that if a buyer has obtained the possession of the goods or the documents
of title to them with the consent of the seller, any sale, pledge or other disposition thereof to
any person will convey s good title and without any notice as regards any lien or other right
of the original seller in respect of those goods.

7. Resale by An Unpaid Seller under Sec 54(3):

If an unpaid seller has practiced his right of lender and the buyer fails to pay
him, he has the right to possess the goods after offering the purchaser notice,
according to this section. When such a notion is not provided, the seller will not
be able to recover any losses from the buyer if the goods sell for less than the
contract price, nor will he be able to keep the value if the goods sell for more.
8. The Sale by Finder of Goods Sec 169, Indian Contract Act:
The finder of goods often has the same liability as the bailee, according to
Section 71 of the Indian Contract Act. He must treat the goods with reasonable
care while they are in his custody and revert back them once the owner has
been verified. Nevertheless, if the owner cannot be recognized with sufficient
certainty or fails to pay the finder's legitimate fees, the finder may sell the
goods, according to Section 169 of the ICA.
9. The Sale by Pawnee � Sec 176 Of Indian Contract Act
If the Pawnor fails to pay the debt, the Pawnee has the option to sue him or sell
the goods pledged after giving the Pawnor reasonable notice of the sale.

Conclusion
The Nemo Dat principle in India is covered by the Indian Contract Act and the
Sale of Goods Act. It is a well-known fact that no one can transfer a higher title
than the one they currently hold, for the simple reason that they are not
authorized to do so. The principle of Nemo Dat quod non-habet, which
translates to no one can give what they don't have. It means that no one can
transfer a better title than he himself has in the context of the sale of goods.

The principle is specifically addressed in sales of goods act between sections

27 and 32, and various exceptions were added to broaden the scope of the
principle and make it more compatible with the agreement of sales of property
and goods.

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