This maxim nemo dat quod non habet literally means “no one can give what one does not have.” The general rule is that “no one can transfer a better title to goods than he himself possesses.”
It is the established principle of law that “no one can give what he has not got”, i.e., a person having no title or authority over the article cannot give better title to the purchaser. If one deals with the goods of another without his authority, the transaction against that other person is invalid in law. The maxim is crucial in ascertaining the rights with regard to ownership, possession, property and commercial goods that are covered under the contract law with respect to the transfer of title.
There are a number of exceptions to the Nemo Dat Rule. These exceptions act to benefit a purchaser who acquires goods in good faith and without knowledge of or notice of the rights of the original owner. The law considers that “a purchaser in good faith, for value and without notice should be able to defend an action brought by any other person in relation to ownership of the goods.”
Mercantile agent is a person who is appointed by principal to do some acts on his behalf. Where a mercantile agent with the consent of the owner being in possession of the goods or of documents of title with respect to them makes a sale in the ordinary course of business, then a buyer from such a mercantile agent acting in good faith and not having notice that the seller has no authority to sell acquires a good title.
If one of several joint owners of goods has the sole possession of them by permission of the co-owners, the property in the goods is transferred to any person who buys them of such joint owner in good faith and has not, at the time of the contract of sale, notice that the seller has no authority to sell.
When the seller of goods has obtained possession thereof under a voidable contract, but the contract has not been rescinded at the time of the sale, the buyer acquires a good title to the goods. It is essential that he buys them in good faith and without notice of the seller’s defect of title.
If an unpaid seller exercises his right of lien or stoppage in transit and sells the goods to another buyer, then the second buyer gets a good title to the goods as against the original buyer.
The term ‘estoppel’ is derived from a French word ‘Estoup’ which means “shut the mouth”. A person, who does an act in good faith on the basis of words/conduct of another, should not be suffered or deceived. When the owner of the goods by his act or omission or conduct allows the buyer to believe that the seller has a right to sell the goods, he (the true owner) cannot deny such sale subsequently.
For example, when a person sold his father’s car in his presence, the father making no objection, he was not subsequently permitted to deny his son’s authority to sell and the sale was binding on him. Estoppel arises from a representation that the seller had the authority to sell.
Adv. Sunil Sharma is a writer for about 25 years and has authored more than 40 books on Law.