nemo dat quod non habet
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nemo dat quod non habet‘a person cannot grant a better title than he himself has.’ This principle (which applies across English property law) is embodied in the Sale of Goods Act 1979 (as amended) applying to the whole of the UK. Thus, a sale by a non-owner will confer on the purchaser no title to the goods, a rule usually illustrated by reference to a sale by a thief from whom no one can derive title, no matter how innocent his involvement might be. The Act, however, specifically excepts the provisions of the Factors Act 1989 or any enactments enabling an apparent owner to dispose of goods as if he were their true owner. The leading exceptions are:
- (1) sale under a voidable title (see VOID): when the seller of goods has a voidable title to them, 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 seller's defect of title;
- (2) sale by a seller in possession after sale, reflecting the provisions of the Factors Act 1889: the Act states that 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, to any person receiving the same in good faith and without notice of the previous sale has 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;
- (3) the buyer in possession after sale: where a person having bought or agreed to buy goods obtains with the consent of the seller 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, or pledge, or other disposition thereof, to any person receiving the sale in good faith and without notice of any lien or other right of the original seller in respect of the goods, has 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 consent of the owner.
It is possible for the original seller to become an agent for the buyer ‘in possession’, so that if the original seller delivers to his buyer's buyer, that third party is a purchaser from a buyer in possession and protected by the section. Specifically excepted from being a buyer in possession after a sale is the buyer under a conditional sale agreement;
- (4) personal bar: there is an exception from the nemo dat rule where the owner of goods is by his conduct precluded from denying the seller's authority to sell, implementing the notion of personal bar;
- (5) judicial sales: warrant sales and other sales under order of the court are not affected by the rules regarding sale by non-owners;
- (6) pledge: Consumer credit legislation permits certain pledged goods to be sold on the expiry of the redemption period. Otherwise the pledge would require a power of sale in the contract or a court order;
- (7) hire-purchase: hire-purchase, in this context, is a contract where the hire-purchaser agrees to pay a rent and is granted an option to purchase. If the hirer is bound to purchase, that is a sale. In a proper case of hire-purchase, someone who buys from the hire-purchaser, or one deriving title from him, gets no title. The position is different if the transaction is covered by special legislation which provides that where the hirer of a motor vehicle under a hire-purchase agreement or the buyer of such a vehicle under a conditional sale agreement disposes of the vehicle to a private purchaser who purchases in good faith and without notice of the said agreement, the disposition has effect as if the title of the owner or seller to the vehicle had been vested in the hirer or buyer immediately before that disposition.
A former exception to the rule permited title to be transferred if the goods were purchased in a recognized ancient market, market overt, but that was abolished by legislation in 1995.