GROUP 5 SALE OF GOODS GROUP ASSESSMENT.

MUGISH A K ELV IN, MW ESIGY E MIC H AEL, NASSUNA AGNESS &

K ISA LETIC IA.

THE ‘NEMO DAT QUOD HABET RULE.

The ‘Sale of goods and supply of services Act 2018’ borrowed provisos from the ‘Sale of Goods
Act, 1893 U.K’ as regards expressly to state the nemo-dat rule. In particular, from Section 21 of
the Sale of goods act U.k which purports to our own Sale of Goods and supply of Services Act
2018; envisaged under Section 29.

Section 29(1) of the Sale of goods and supply of services Act, 2018 is to the effect that where
goods are sold by a person not owing the goods, and without ‘prior’ 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

their conduct precluded from denying the seller’s authority to sell. (this is the full representation

of the nemo-dat rule thus stating that a seller not being an owner cannot pass better title than

they possess forming THE GENERAL RULE).

Also according to jus corpus1, the rule of the nemo-dat implies that no one gives what they do
not have.

Though following the later amended Sale of goods act, 1930; - the general rule supposes that

only the owner of good can sell the goods or transfer the possession or ownership of that good to

the buyer (any other person not having title over the goods.)

 In a typical case involving the ‘nemo-dat rule’ the seller (who is not the owner) will have
sold goods to an innocent 3rd party and then will have disappeared or become insolvent so

that the two parties may not be able to seek a remedy for him, thus either the owner or the

3rd party must suffer loss, and the courts have to decide which party is clearly situated for
an effective remedy; -

Thus LORD JUSTICE DENNING, stated in Bishop’s Gate Motor Financing Corpn vs
Transport Brakes Ltd2;- “In the development of our law, two principles have striven for
mastery. The first is for protection of property; -no one can give a better title than he himself

possesses. The second is the protection of commercial transactions. The person who takes in

1 Jus Corpus Law Journal; legal online source.

2 [1949] 1 K.B 322.
 GROUP 5 SALE OF GOODS GROUP ASSESSMENT.
MUGISH A K ELV IN, MW ESIGY E MIC H AEL, NASSUNA AGNESS &
K ISA LETIC IA.

good-faith and for value without notice should acquire a good title.” The first principle has held

sway for a long time, but has been modified at common law itself and by statute so as to meet the

needs of our times. The rule is also stated in the Sale of Goods Act U.K 1983. (Discussion

Supra).

Whereas consent is crucial in relation to the nemo-dat rule such that the original owner must

have consented the seller(not being the actual owner of the goods) to transact a sale, LORD

ATKIN articulated in Bell vs Lever Bros3;- that mistake principally negatives consent in a
contract.(this may act as an exception the nemo-dat rule, though not as substantial as to the

exceptions laid under the Sale Of Goods and Supply of services Act 2018).

Thus in Cundy vs Lindsay4;- The claimant received an order for the sale of hand-kerchiefs from
a person named Blenkarn, who signed his name in a manner resembling ‘Blenkiron’ & Co- a

reputed firm located at 123, wood street herein he asserted his address to be at 37 wood street,

Cheap side to which the claimant sent the goods. Although no payment was made by Blenkarn,
he sold the goods to a 3rd party(defendants). The claimants alleged that they mistakenly sold the

goods to Blenkharn under the mistaken assumption that they were selling the hand-kerchiefs to

Blenkiron & C0 and argued that there was no real consent to the Contract of Sale thus no valid

transfer of title (as per claimants).

ISSUES

Whether a mistake as to the identity of a contracting party was fundamental so as to negate

consent of the other party thus voiding the contract and whether there was any contract of sale

between the Claimant and Blenkarn, and if not, could the 3rd parties procure a good title to the

goods.

HELD

The claimant did not intend to sell the hand-kerchiefs to Blenkharn but to Blenkiron & C0 thus

there was no consent of the claimant to the contract with Blenkharn thus no contract of sale was

3 [1932] A.C 161, 217.

4 [1874-80] ALL ER 1149.
 GROUP 5 SALE OF GOODS GROUP ASSESSMENT.
MUGISH A K ELV IN, MW ESIGY E MIC H AEL, NASSUNA AGNESS &
K ISA LETIC IA.

concluded between the claimant and Blenkharn so as to constitute a valid transfer of title which

Blenkharn could rightfully convey unto the 3rd parties(defendants), the title remained with the

claimant hence the defendants being in possession without good title over such goods, were held

liable for conversion.

EXCEPTIONS TO THE ‘NEMO-DAT’ RULE.

The exceptions to the ‘nemo-dat’ rule that a seller cannot pass better title to the buyer than that
he holds/possesses are envisaged in our law of sale of goods (Sale of goods and Supply of
Services Act 2018) statute as borrowed from the original Sale of Goods Act U.K 1893 and they

are as follows; -

1.Sale under the authority of the owner; - this arises from the general rule contained under
section 29(1) of the sale of goods and supply of services act 2018 that much as the seller’s title

is void to the extent of the original owner’s consent; the contract of sale will be valid upon the

original owner granting consent to the seller to transact a sale on their behalf. (this is well

stressed in Agency transactions).

This is one of the most accepted exceptions to the nemo-dat quod non habet rule. The court will

always hold that buyer has good title if the above is proved;- thus according to common law, a

seller can transfer good title if he sells with the authority or consent of the owner5. Hence it will

be taken that the seller sells as an agent of the owner. By judicial interpretation, an agent does

not warrant the title of the principal but only warrants that he knows no defect in the principal’s

title.

2.Misleading conduct of the seller; -

Another exception to the nemo-dat quod non habet rule is provided for under section 22 of the

sale of goods act U.K 1983 (which was borrowed and precluded under S.29(1) of the Sale of
Goods and |Supply of services Act, 2018.) which is to the effect that the owner of the goods

5 B.Scholary.com//Legal online Source.

 GROUP 5 SALE OF GOODS GROUP ASSESSMENT.
MUGISH A K ELV IN, MW ESIGY E MIC H AEL, NASSUNA AGNESS &
K ISA LETIC IA.

cannot challenge the sale if, by his or her conduct, he or she has represented the seller as having

authority to sell. This may take the form of Estoppel by Conduct. Thus in Henderson & Co. vs

Williams6 ;- M who had some goods in the defendant’s warehouse instructed them to hold the

goods to the order of F. F negotiated the goods to the plaintiff. Before the delivery, M discovered

F’s fraudulent intention and instructed the defendants not to deliver the goods to the plaintiff. It

was held that the plaintiffs were entitled to damages for conversion because property had passed

to them. The above case clearly explains where the misleading conduct of a seller can indirectly

pass good title to the buyer.

3. Sale under any special Common law or Statutory power of Sale; - This is provided for
under section 29(2)(b) of the Sale of goods and supply of services Act 2018, which is to the

effect that, “the provisos of this act shall not affect the validity of any contract of sale under any
special common law or statutory power of sale or under the order of a court of competent
jurisdiction.”

This section deals with situations where a sale of goods may be effected without the owner’s

consent hence taking place where goods may be sold under common law powers by a pledge

(refer to Re Hardwick, ex p Hunnard.) The court may also order a sale of goods, either under its

in-herent powers such as enforcing a charge or pursuant to the rules of the Court which can take

the form of disposing of the goods which are perishable or likely to determinate, this may well

enough take place even against the wishes of the owner as stressed in Larner vs Fawcett7;- F.

agreed with the D. that he should take his filly (young female horse-usually less than four years

old) on a lease for a certain period on the basis that the money won in racing should be equally
shared and that the D. should pay all expenses and have the right to purchase the filly at any time

herein D. agreed with L. that L. should train the filly therein later on F. learned that L. had the

filly and L. informed him that he had started an action against D. in respect of her upkeep. Later

on L. obtained judgment and began an action against F. claiming, inter alia, a declaration that he

was entitled to a lien (a right to keep possession of property belonging to another person until a

6 (1895) 1.KB. 521.

7 [1950] 2 ALL ER 727.
 GROUP 5 SALE OF GOODS GROUP ASSESSMENT.
MUGISH A K ELV IN, MW ESIGY E MIC H AEL, NASSUNA AGNESS &
K ISA LETIC IA.

debt owed by that person is discharged.) on the filly in respect of its upkeep and an order that the
filly should be sold, concurrently on the same day L. filled a notice of motion asking for an order

of sale under R.S.C Ord.50 r.2.

Held (primal Court).

Rule 2 was not confined to cases in which the applicant had, apart from the rule, a right of sale

at law or in equity, but conferred power on the court in the present case to order the sale of the

filly, and, on the facts, it was proper to make the order claimed.

4. Sales under a voidable title: - A sale under a voidable title where the title has not been avoided,
will confer a good title thus S.30 of the Sale of Goods and Supply of Services Act 2018 provides

that where the seller of goods has a voidable title thereto, but his title has not been avoided at the

time of the sale, the buyer acquires a good title to the goods, provided he buys them in good-faith

and without notice of the defect in the seller’s title.

5. Sale by seller in possession of the goods;- this is another exception to the nemo-dat rule
(envisaged under s.32(1) of the Sale of Goods and Supply of Services Act 2018) where a person,

having sold goods, continues or is in possession of the goods or of the documents of title to the

goods, 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 or other disposition thereof or under any
agreement for sale, pledge or other disposition thereof to any person receiving the same effect as if

the person making the delivery or transfer were expressly authorized by the owner of goods to

make the same. This also applies to cases where the seller has goods but has remained in

possession of the goods or title documents. The law allows him to pass a good title because, in

effect, he is the apparent owner of those goods. (this was corroborated in the English case of

Pacific Motors Auction vs Motor Credits.8

6. Sale by buyer in possession of the goods;- This is also another exception down-cast upon our
Sale of Goods and Supply of services Act 2018 under s.32(2) which is of the view that where a

8 (1965) A.C 867.

 GROUP 5 SALE OF GOODS GROUP ASSESSMENT.
MUGISH A K ELV IN, MW ESIGY E MIC H AEL, NASSUNA AGNESS &
K ISA LETIC IA.

person, having bought or agreed to buy goods, obtains with the consent of the seller, possession of

the goods or the documents of title to the goods, 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 or

other disposition thereof of any person receiving the same in good-faith and without notice of any

lien or right of the original seller in respect of the goods, shall have the same effect as if the person

making the delivery or transfer were a (mercantile) agent in possession of the goods or documents

of title with the owner’s consent.

In conclusion, the nemo-dat rules ensures valid transactional sales between the buyer and seller

and offers adequate remedies through its exceptions to 3rd parties who might be aggrieved as to

finding where they lie in a contract of sale by the rule rigidities and complexities of the rule.