The literal meaning of the phrase “nemo dat quod non habet” means no one can give what he
does not have. 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.
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.
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.
The case in the question is of Greenwood v Bennett, 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 to Section 27
In the following scenarios a non-owner of goods can transfer a better title to the buyer:
1] Sale by a Mercantile agent (Proviso to Section 27
Consider a mercantile agent, who is in possession of the goods or a document to the title of the
goods, with the consent of the owner. Such an agent can sell the goods when acting in the
ordinary course of business of a mercantile agent.
Case: Folkes v. R
2] Sale by one of the Joint Owners (Section 28)
Many times goods are purchased in joint ownership. In many cases, the goods are kept in the
possession of one of these joint owners by the permission of the co-owners. If this person (who
has the sole possession of the goods) sells the goods, the property in the goods is transferred to
the buyer. This is provided the buyer acts in good faith and has no reason to believe that the
seller does not have a right to sell the goods.
3] Sale by a Person in Possession of Goods under a Voidable Contract (Section 29)
Consider a person who acquires possession of certain goods under a contract voidable on
grounds of coercion, misrepresentation, fraud or undue influence. If this person sells the goods
before the contract is terminated by the original owner of the goods, then the buyer acquires a
good title to the goods.
4] Sale by a Person who has already sold the Goods but Continues to have Possession
[Section 30 (1)]
Consider a person who has sold goods but continues to be in possession of them or of the
documents of title to them. This person might sell the goods to another buyer.
If this buyer acts in good faith and is unaware of the earlier sale, then he will have a good title
to the goods even though the property in the goods was passed to the first buyer. A pledge or
other disposition of the goods or documents of title by the seller in possession are valid too.
Case: Johnson v. credit Lyonnais Co.
5] Sale by Buyer obtaining possession before the Property in the Goods has Vested in him
[Section 30 (2)]
Consider a buyer who obtains possession of the goods before the property in them is passed to
him, with the permission of the seller. He may sell, pledge or dispose of the goods to another person.
Case: Worcester works Finance Ltd v. Cooden Engg co ltd.
If the second buyer obtains delivery of the goods in good faith and without notice of the lien
or any other right of the original seller, he gets a good title to them.
6] Estoppel
If an owner of goods is stopped by the conduct from denying the seller’s authority to sell, the
buyer gets a good title. However, to get a good title by estoppel, it needs to be proved that the
original owner had actively suffered or held out the seller in question as a person authorized to
sell the goods.
Cases: Merchantile Bank of india ltd v. Central bank of india ltd.
7] Sale by an Unpaid Seller [Section 54 (3)]
If an unpaid seller exercises his right of lien or stoppage in transit and sells the goods to another
buyer, then the second buyer gets a good title to the goods as against the original buyer. So in such a case transfer of title will occur.
Aishwarya Says:
I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.
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