THE PRINCIPLE OF NEMO DAT QUOD NON HABET AND THE SALE OF GOODS

 

Nemo dat quod non habet is a general rule that a person who buys goods from someone other than the owner of the goods will not obtain good title to the goods and it makes no difference if he acted in good faith. If a seller of goods has no property in the goods and does not sell on the authority or consent of the owner, then he cannot transfer a good title to a buyer. This general rule is expressed in the Latin maxim “Nemo dat non quod habet.” The principle literally means no one can give what he does not have. In other words, a person cannot afford what he does not have – a person cannot transfer what he does not possess. Section 21(1) provides that where goods are sold by a person who does is not the owner and who does not sell them under the authority or 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. To this effect, a seller in commercial transactions cannot transfer a valid title to a buyer when he has not title to the subject matter of dispute.

   Under the exceptions to the general rule of Nemo dat quod non habet, as provided in the  circumstances infra, a non owner who would otherwise not be entitled to pass good title would by deemed by law to have passed a good title.  Thus the following are the exceptions to the rule:

       Sale under Agency: A sale by an agent without actual authority will give the purchaser a good title if the sale is within the agent’s apparent authority. This exception is a creation of section 21(1) of the Act which provides that if a person is not the owner of goods and sells goods under the authority or with the consent of the owner, the buyer acquires a good title. In other words, the principle of agency may permit a seller who is not the owner to transfer title to the buyer. This means that the person selling and the owner have created an agency relation.

       Estoppel: Estoppel is an exception created by section 21(1) of the Act which provides that unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell. Thus, where the owner of goods represents that another is his agent, although no such authority exist in fact, in this situation the transfer of such property in good is valid and the owner would be stopped from denying the fact. In Henderson & co v Williams Ltd, it was held that both Y and Z were stopped from denying X’s authority to sell the sugar, the farner (Y) because he has represented that X was the owner by ordering Z to transfer the goods into his name in their books and the later Z because he had attained to R, that is, represented to him that he held the goods to his order. To this end, it should be noted that estoppels could either be estoppels by representation or estoppels by negligence. Estoppels by representation are divided into: estoppels by word and estoppels by conduct.

       Sale in Market Overt: A market overt is am open and legally constituted market where people usually gather to carryout transactions involving buying and selling of goods. Only markets are legally constituted by law; they are those recognised as market. In other words for a place to be recognised as market, it must be constituted and recognised by law. For example, Market overt may include Keffi market, Massaka market, Nasarawa market etc are all examples of market overt under the control of the local government council .Apart from statute, and market overt could also be a creation of custom. An unauthorised market does not qualify as market overt.

       Section 22(1) of the Act provides that where goods are sold in a market overt, according to the usage of the market, the buyer acquires a good title provided he buys in good faith and without notice of defect or want of title on the part of the seller. Also, to constitute a sale in market overt, it must be shown that the sale took place within the premises of the market during the usual period of business, provided it is sale of goods usually sold or bought in the market. The usual period of the market is from sun rise to sun set. In Reid v Metropolitan Police Commissioner, the sale of stolen goods took place in a market overt. The Court of Appeal quashed the decision of the lower court to hold in favour of the defendant buyer, because the goods should have been sold at day time when all who passed could see the goods.

       Sale by a person having voidable title: Where a contract is said to be concluded on mistake, misrepresentation etc particularly where in such a transaction the buyer fails to avoid the contract either by express words or conduct and subsequently the subject matter is transferred to another buyer (third party) who purchases in good faith, in this regards the transfer of the property to the buyer is valid. In other words, a person who buys goods under a voidable contract acquires a voidable title and if he resells the goods before the contract is avoided, the subsequent buyer acquires a valid title which is not affected by the subsequent rescission of the contract. The above principle is affirmed by section 23 of the Act which provides that where a seller of goods has a voidable title but his title has not been avoided at the time of sale, the buyer acquires a good title provided he buys the goods in good faith and without notice of the seller’s defect in title. In Lewis v Averay, a rogue, impersonating a famous actor got the seller to deliver a car to him by issuing a fake cheque. Before the cheque was returned unpaid by the bank, the rogue had sold the car to a buyer who has no notice of the fraud. It was held that the latter purchaser got a good title by virtue of section 23. However, it should be noted that the contract was concluded on mistake, misrepresentation or other fraud and the buyer is aware of it but still go ahead to purchase the goods, the contract would be invalid.

       Sale by Seller in Possession: the transaction is effected where a person who has sold goods retains possession of the said goods and subsequently resells them to another person i.e. a third party. Thus, provided that the third party bought goods in good faith and had no notice of the previous sale, the transfer of property in the goods in this instance is valid. This principle is governed by section 25(1) of the Sale of Goods Act as well as section 8 of the Factors Act.

       Sale by a buyer in possession: This principle provides that where there is a contract of sale of goods as between a buyer and the seller for which the goods are left in possession of the buyer who although, has not acquired the title of the goods provided that the property in the goods is yet to be transferred to the buyer. Thus, if the buyer subsequently sells the goods in his possession to a third party who received the goods in good faith without notice of the original seller’s right, the transfer of property in the goods becomes valid. This principle is guided by section 25(2) of the Sale of Goods Act and section 9 of the Factors Act. Hypothetically, if A agrees to sell to B and B is given possession of the goods although property in the goods has not pass to B when sale is executed and delivered in C by B who takes the goods in good faith the transfer of property to C becomes valid.

       Sale by a mercantile agent: This except provides that where with the authority and consent of the owner subsequently acquires possession of the goods – any sale executed on such goods by the agent to a buyer will be valid. However, whether or not sale is authorised by the owner is immaterial provided the owner of the goods employs the seller as his agent to the goods under possession. This exception is governed by section 1(1) and section 2 of the Factors Act 1889 which deals with the powers of a mercantile agent.

       Sale under common law:  Section 21(2) of the Sale of Goods Act provides that nothing in this Act shall affect the validity of any contract of sale under the order of court of competent jurisdiction. Thus, at common law, sale can be effected without the consent of the owner and the buyer will acquire good title where for instance a pledge of goods sells or where a person sells as agent of necessity.

       Sale under statutory power: Statutory power of sale is provided for by various statutes which include the following:

•           Under section 48(3) of the Sale of Goods, an unpaid seller of goods has power to resell goods of a perishable nature.

•           Under section 226(2)a of the Companies Act, 1968, a liquidator of a company has power to sell the company’s property.

•           Also under section 57 of the bankruptcy Act, a trustee in bankruptcy has power to sell property of the bankrupt.

       Sale under court order: Section 21(2)b of the Sale of Goods Act protect all sales carried out under the order of court of competent jurisdiction. Thus, where a court bailiff in execution of a court order or an auctioneer of the court carry out sale of goods which he has no title, the transfer of property in the goods will be valid.