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.
Denning LJ described the role of modern law in the case Bishopsgate Motor Finance Corpn. Ltd. v. Transport Brakes Ltd: “In the development of our law, two principles have striven for mastery. The first is the 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 good faith and for value without notice should get a good title. The first principle held sway for a long time but it has been modified by the common law itself and by statute so as to meet the needs of our times.”
IMPLEMENTATION OF MAXIM IN INDIA
Section 27: Sale by person not the owner- “Subject to the provisions of this Act and of any other law for the time being in force, 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, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by conduct precluded from denying the seller’s authority to sell.”
As a general rule, Section 27 attempts to protect the true owner’s interests by stating that when goods are sold by someone who is not the owner and who does not sell them under the authority or with the permission of the owner, the buyer acquires no better title to the goods than the seller.
If the seller’s title is defective, the buyer’s title would be as well. The rule does not mean that the title chosen by the buyer would always be bad. It means that the buyer cannot obtain a title that is superior to the seller’s. When a thief sells stolen property, the buyer inherits the same title as the seller.
The case of Greenwood v Bennett is a good example of the principle. In this instance, the original owner of a Jaguar car (Bennett) entrusted it for repairs to a man called Searle. Searle then took the car and used it for his own purposes, crashing it and causing significant damage. For £75, Searle sold the car to Harper, who owned a garage. Harper had no idea that Searle was not the car’s owner.
Harper then spent £226 on repairs before selling the vehicle to a finance firm. The court determined that the car belonged to Bennett because Searle did not have title and therefore could not pass it to Harper. Harper was unable to pass title to the finance company for the same reason. Bennett was able to reclaim the vehicle, but he had to pay Harper for the work he had done to it.
The owner has the ability to verify the creditworthiness of the individual to whom he gives possession of the products, and there is a case to be made that if the owner’s confidence is misplaced, he does not impose the effects of his own erroneous judgment on the innocent purchaser. There is no way for a buyer to easily examine the title to chattels, and if products are to pass freely across the distribution chain, consumers must have faith in their purchases.
By Palak Agarwal @LexCliq