“Nemo Dat Quod Non Habet” Rule & Exceptions to the rule
Posted Date : 28-Dec-2012 , 05:43:17 pm | Posted By Vinay Sharma Your Rating: NoneAverage : 4.83
Exceptions to the Rule Nemo dat Quod Non Habet: The term means, “none can give or
transfer goods what he does not himself own”. Exceptions to the rule and the cases in which
the Rule does not apply under the provisions of the Sale of Goods Act, 1930 are enumerated
(1) Effect of Estoppel (Section 27): Where the owner is stopped by the conduct from denying
the seller’s authority to sell, the transferee will get a good title as against the true owner.
But before a good title by estoppel can be made, it must be shown that the true owner
had actively suffered or held out the other person in question as the true owner or as a
person authorized to sell the goods.
(2) Sale by a Mercantile Agent: A sale made by a mercantile agent of the goods or document
of title to goods would pass a good title to the buyer in the following circumstances,
(a) if he was in possession of the goods or documents with the consent of the owner;
(b) if the sale was made by him when acting in the ordinary course of business as a
mercantile agent; and
(c) if the buyer had acted in good faith and has at the time of the contract of sale, no
notice of the fact that the seller had no authority to sell.(Proviso to Section 27).
(3) Sale by one of the joint owners: If one of the several joint owners of goods has the sole
possession of them with the permission of the others the property in the goods may be
transferred to any person who buys them from such a joint owner in good faith and does
not at the time of the contract of sale have notice that the seller has no authority to sell.
(4) Sale by a person in possession under voidable contract: A buyer would acquire a
good title to the goods sold to him by seller who had obtained possession of the goods under a contract voidable on the ground of coercion, fraud, misrepresentation or undue
influence provided that the contract had not been rescinded until the time of the sale
(5) Sale by one who has already sold the goods but continues in possession thereof:
If a person has sold goods but continues to be in possession of them or of the documents
of title to them, he may sell them to a third person, and if such person obtains the
delivery thereof in good faith without notice of the previous sale, he would have good title
to them, although the property in th e goods had passed to the first buyer earlier. A
pledge or other deposition of the goods or documents of title by the seller in possession
are equally valid. [Section 30(1)].
(6) Sale by buyer obtaining possession before the property in the goods has ve sted in
him: Where a buyer with the consent of seller obtains possession of the goods before
the property in them has passed to him, he may sell, pledge or otherwise dispose of the
goods to a third person, and if such person obtains delivery of the goods in good faith
and without notice of the lien or other right of the original seller in respect of the goods in
good faith and without notice of the lien or other right of the original seller in respect of
the goods, he would get a good title to them. [Secti on 30(2)].
(7) Sale by an unpaid seller: Where on unpaid seller who had exercised his right of lien or
stoppage in transit resells the goods, the buyer acquires a good title to the goods as
against the original buyer [Section 54(3)].
(8) Sale under the provisions of other Acts:
(i) Sale by an official Receiver or liquidator of the company will give the purchaser a
(ii) Purchase of goods from a finder of goods will get a valid title under circumstances.
(iii) Sale by a pawnee under default of pawnor will give valid title to the purchaser.