Nemo dat quod non habet
Nemo dat quod non habet says ” “. In the legal field, it calls the nemo dat rule. It means, the purchase of a possession from someone who has no ownership right to it also denies the purchaser any ownership title.
If the purchaser does not know that the seller has no right to claim ownership of the object of the transaction, calls bona fide purchaser can have valid title.
Uniform Commercial Code in the United States and nemo dat quod non habet
USA a bona fide purchaser who innocently purchases and then sells stolen goods will, at common law, be held liable in trover (common law action to recover the value of personal property that has been wrongfully disposed of by another person.) for the full marketplace value of those goods as of the date of transformation.
Subsequently, the actual owner keeps legal title, the seller is liable even in a chain of successive bona fide purchasers (the actual owner can successfully sue the bona fide purchaser in trover).
The problem of successive bona fide purchasers can be fixed: If the jurisdiction identifies an implied warranty that the seller has title to the property (Article 2 of the Uniform Commercial Code in the United States), then the bona fide purchaser can sue the seller for breach of that implied warranty.
Sale of Goods Act 1979
The actual owner can acquire protection against the previous owner through the doctrine of estoppel.
Section 21(1) of the Sale of Goods Act 1979 says;
‘…unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell’
Methods of the estoppel (is exception for nemo dat quod non habet) can be by words, by conduct, or by negligence.
Exceptions for nemo dat quod non habet
Sale of Goods Act No 11 of 1896
Estoppel 22 (1)
“…where goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, 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.”
Sale by Factor 22 (1) a)
“ the provisions of the Factors Act, or any enactment of the parliament of the UK in force in Ceylon, or any local enactment, enabling the apparent owner of goods to dispose of them as if he were true owner”
Sale under any statutory power 22 (1) b)
“the validity of any contract of sale under any statutory power of sale or under the order of a court of competent court”
Sale by seller in possession after sale 25 (1)
“where 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, to any person receiving the same in good faith and without notice of the previous sale, shall have the same effect as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make the same”
Sale under voidable title 23
“when the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, buyer acquires a good title to the goods…”
Stolen goods 24 (1)
“where goods have been stolen and the offender is prosecuted to conviction, the property in the goods so stolen re-vests in the person who was the owner of the goods…”
Writs of execution 26
“…no such writ shall prejudice the title to such goods acquired by any person in good faith and for valuable consideration…”