Nemo dat quod non habet, literally “no one gives what he doesn’t have,” is a legal principle that states that purchasing a possession from anyone who does not have ownership rights to it often refuses the purchaser any ownership title.
The Nemo Dat Rule has some exceptions. These exceptions cover the rights of a purchaser who purchased goods in good faith (as specified by section 3(2) of the Goods Act 1958) and without knowledge of the original owner’s rights.
This contains the following:
The sale took place under a voidable title.
When a seller has a voidable title that hasn’t been voided by the time the buyer acquires the goods, this is the case. This exemption, found in section 29 of the Goods Act 1958, allows a buyer to obtain good title to goods if they were bought in good faith and without knowledge of the seller’s title defect.
Example – W gained possession of a diamond ring from N by deception. Before N revoked the contract, W sold the ring to J. J purchased the ring in good faith, oblivious to W’s faulty possession. N will be unable to reclaim the ring from J.
The doctrine of estoppel
This occurs when the owner of the goods has behaved in such a way that the seller of the goods may not have permission to sell the goods.
Estoppel is the result of
-Act or omission – but it must be a legal requirement
-Negligence – not just any negligence, but negligence in relation to the individual.
Example- In the presence of D, T informed B, a customer, that he (T) is the owner of the radio. Despite the fact that the Radio belonged to him, D remained quiet. B purchased the radio from T here. B will get a valid title to the radio even though T did not have one because D is prevented from refusing T’s authority to sell the radio through his own actions.
Dispositions have been made by sellers in possession
In some cases, a seller can sell goods to one buyer and then attempt to sell them to another buyer after retaining possession of the goods. When the seller has already sold goods, rather than when the first disposal is a sale agreement, the section applies. It also only occurs when the products or title documents are shipped or passed to the second buyer. The exception states that in these cases, the goods would be transferred to the second buyer.
Example- M sold F two camera sets, one of which was shipped immediately and the other two days later. F later sent the first camera to M for minor repairs. The first camera was resold to D, and the second was resold to Q. Both D and Q made their purchases in good faith and without knowledge of the previous transaction. In this case, Q received a good title to the camera, but D did not, since M was in possession of the camera in the capacity of a bailee, not as a seller.
By Palak Agarwal at LexCliq