Explain the maxim “Nemo dat quod non habet” with exceptions (if any)

---

⭐ QUESTION 3

Explain the maxim “Nemo dat quod non habet” with exceptions (if any).

---

1. INTRODUCTION

The maxim “Nemo dat quod non habet” is a basic rule under the Sale of Goods Act, 1930.
It protects the true owner of goods and prevents wrongful transfer of ownership.

The maxim is Latin and means:
👉 “No one can give what he does not have.”

So, a person who does not own the goods cannot transfer better title than he himself possesses.

---

2. MEANING OF THE RULE

Section 27, Sale of Goods Act, 1930

Generally, a buyer cannot get a better title than the seller.

Example:

If a thief steals A’s phone and sells it to B:

• Thief has no title
• So B gets no title
• A can take back his phone even from B

This protects ownership rights and prevents fraud.

---

3. JUSTIFICATION OF THE RULE

1. Protects true owners
2. Prevents fraudulent sales
3. Promotes certainty and safety in commercial transactions
4. Ensures only lawful transfer of property

---

⭐ 4. IMPORTANT EXCEPTIONS TO THE RULE

Although the rule protects owners, strict application may harm honest buyers.
Therefore, law creates exceptions where even a non-owner can pass a good title.

There are 10 major exceptions.

---

EXCEPTION 1 – Sale by a Mercantile Agent (Section 27, Proviso)

A mercantile agent is an agent who:

• is in possession of goods
• is authorized to sell, buy, consign, or raise money on goods

If the agent sells goods:

• in ordinary course of business
• in good faith
• buyer has no notice of defect in title

👉 Buyer gets good title, even though agent violated instructions.

Case: Folkes v. King

Mercantile agent sold goods without permission. Buyer got a good title.

---

EXCEPTION 2 – Sale by One of Several Joint Owners (Section 28)

If one joint owner:

• has possession of goods, and
• sells them to a buyer in good faith

👉 Buyer gets good title.

Example

A, B, C are joint owners of a horse.
A keeps the horse and sells it to X.
X gets good title.

---

EXCEPTION 3 – Sale by a Person in Possession Under a Voidable Contract (Section 29)

If seller obtained goods through:

• coercion
• undue influence
• fraud
• misrepresentation

Contract is voidable but until avoided, seller can pass good title to buyer who buys:

• in good faith
• for consideration
• without notice

Example

B buys car from A by misrepresentation.
Before A cancels the contract, B sells to C (good-faith buyer).
C gets good title.

---

EXCEPTION 4 – Sale by Seller in Possession After Sale (Section 30(1))

If seller already sold goods to A but still retains possession,
and then sells them again to B (in good faith),

👉 B gets good title.

Example

A sells goods to X but keeps goods in warehouse.
Later sells to Y.
Y (good-faith buyer) gets better title.

---

EXCEPTION 5 – Sale by Buyer in Possession After Sale (Section 30(2))

If buyer gets possession though ownership not yet transferred
(example: under “agreement to sell”),
and then resells to a good-faith buyer,

👉 That buyer gets good title.

Example

B takes possession of goods on hire-purchase, then sells to C.
C gets good title (buyer in possession rule).

---

EXCEPTION 6 – Estoppel (Section 27, Explanation)

If the true owner’s conduct makes buyer believe seller has authority to sell,
then owner is estopped (stopped) from denying seller’s authority.

Example

A allows B to appear as owner of jewellery.
B sells to X.
A cannot claim it back → X gets good title.

---

EXCEPTION 7 – Sale by Unpaid Seller (Section 54)

An unpaid seller who has exercised:

• right of lien, or
• right of stoppage in transit

may resell goods.

👉 Buyer in resale gets good title, even without owner’s consent.

---

EXCEPTION 8 – Sale by Finder of Lost Goods (Section 169, Contract Act)

Finder can sell if:

• Owner cannot be found, or
• Goods are perishable, or
• Owner fails to pay lawful charges

Buyer obtains good title.

---

EXCEPTION 9 – Sale Under Statutory Power

Sometimes law gives authority to sell goods:

• sale by court order
• sale by government authority
• sale under customs or income tax law

👉 Buyer gets absolute title.

---

EXCEPTION 10 – Sale Under Special Common Law Rules

Such as:

• sale in market overt (in some countries)
• negotiable instruments (like cheques)

Buyer gets good title even from a non-owner.

---

⭐ 5. IMPORTANT CASE LAWS

1. Rodgers v. Phillips – No one can transfer better title than he has.
2. Folkes v. King – Mercantile agent can pass good title.
3. Staffordshire Motor Guarantee Ltd. v. British Wagon Co. – Buyer in possession can pass good title.
4. Cundy v. Lindsay – Void contract → No title passes.
5. Edwards v. Railway Executive – Estoppel applies where owner’s conduct creates appearance of authority.

---

⭐ 6. ILLUSTRATIONS

Illustration 1 – (General Rule)

Thief steals laptop and sells it to B.
→ B gets no title.
→ Owner can recover from B.

---

Illustration 2 – (Exception: Mercantile Agent)

A gives watch to B (agent) to show customers only.
B sells without authority.
→ Buyer gets good title.

---

Illustration 3 – (Seller in Possession)

A sells car to X but keeps car with him.
Later sells to Y (good-faith).
→ Y gets title.

---

Illustration 4 – (Estoppel)

A makes B appear as owner by silence or conduct.
B sells to C.
→ A cannot claim back.

---

⭐ 7. CONCLUSION

• The maxim Nemo dat quod non habet ensures that ownership cannot be transferred by a person who does not own the goods.
• It protects true owners and maintains security of property.
• However, rigid application may harm honest buyers, therefore the law recognizes important exceptions, such as:
  • mercantile agent
  • joint owner
  • voidable contract
  • buyer/seller in possession
  • estoppel
  • unpaid seller
  • finder of goods
  • statutory sales

These exceptions balance protection of owners with the smooth flow of commerce.

---