Ownership of Goods and Services

Defintion of Nemo Dat and its application

Nemo dat quod non-habet literally means that “no one gives what he does not have” and it is a legal rule which states that, “The purchase of a possession for someone who has no ownership right to it also denies the purchaser any ownership title”.

Example

John bought a car online from Billi for £5,000. Later on, he found out that the car did not belong to Billi and it was a stolen car and its legal owner is Mischa. Under the rule “no one gives what he does not have” John has not acquired a good title or ownership of the car as Billi was not the rightful owner of the car and Billi could not transfer the ownership as he did not have the ownership at first place.

Important

John could always sue Billie for the fraud he has committed and the return of his money.

The doctrine of Estoppel (Please refer to the chapter of Property Estoppel under Property Law).

The doctrine of estoppel provides a mean by which interests in a property can be obtained informally. Estoppel is a remedy which is used to compensate a person (A) who was either actively encourage by another person (B) to believe that the person (A) has present or future rights/interests in person B’s property.

Problem

The problem occurs when the future ownership or rights which are promised are not transferred legally. i.e. by fulfilling the legal requirements and as these promises are generally made orally, the promisor finds it easy to withdraw the representation or promise made by him/her.

Under the doctrine of estoppel, courts will not allow the lack of legal formalities to be a reason for the promisor to withdraw his promise and courts will compensate any loss suffered by a person who has acted upon such representation.

The new owner of the goods or services can obtain protection against the former owner through the doctrine of Estoppel. Provided the following conditions have been fulfilled.

  • The original/former owner must have made a representation by statement or conduct that the seller was entitled to sell the goods.
  • The representation must have been made intentionally or negligently.
  • The representation must have misled the innocent purchaser/new owner.
  • The innocent purchaser must have bought the goods. (and not merely agreed to buy the goods)

Example

John bought a car from Billi and Mischa for £5,000 and Mischa stated during the negotiations for the price that Billie has the authority to sell her car. Later on, Mischa claimed that the car did not belong to Billi and it was a stolen car and its legal owner is Mischa. Under the rule “no one gives what he does not have” John has not acquired a good title or ownership of the car as Billi was not the rightful owner of the car and Billi could not transfer the ownership as he did not have the ownership at first place.

However, Under the Doctrine of Estoppel Billie will be the new legal owner of the Car as Mischa led him to believe that Billie was the owner or was authorised to sell Mischa’s Car.

John is now the new owner of the car.

What is a mercantile agent

Where a mercantile agent is in the possession of the goods or holds the documents of the title of the goods, any sale made by the mercantile agent while acting in his/her regular course of business will be valid as if he was expressly authorised by the owner of the goods to make the sale, provided following six conditions are met     

  • The seller must be a mercantile agent.
  • The seller must be in possession of the goods or must hold the documents of the title of the goods.
  • The seller must be in possession of the goods or the title of the goods in his capacity as a mercantile agent.
  • The seller must be in possession of the goods or document of title with the consent of the owner.
  • The seller must be acting in the ordinary course of business of a mercantile agent.
  • The person taking the goods must have taken them in good faith without notice of the agent’s lack of authority.

Sale under a voidable title

When a seller of goods has a voidable title, but at the time of the sale it was not avoided, the buyer will acquire the good title to the goods as long as the buyer has bought the goods in good faith and without the notice that the seller had a voidable title.

Seller in possession after sale

After the seller has sold goods but continues to be in possession of those goods or title of the goods, the delivery or transfer by the seller would have the same effect as if the delivery was expressly authorised by the owner of the goods.

Buyer in possession after sale

Where a person having bought goods, obtains the goods with the consent of the seller, the delivery or transfer to that person receiving it in good faith and without any notice of lien, the buyer will take the possession and good title of the goods.

Title to motor vehicles on hire-purchase or conditional sale

Law offers protection to a buyer of a motor vehicle who has bought the vehicle which was subject to an agreement under Hire- Purchase or which was under Finance or had been sold under a conditional sale agreement to the seller but before the transfer of property or ownership to the seller of the vehicle. The buyer of such vehicle is protected by law.

This is to protect third-party buyers who may not know that the motor vehicle they are buying is under a hire purchase or conditional sale agreement. If the buyer is a private buyer then as long as he bought the vehicle in good faith without any prior knowledge regarding the hire purchase or conditional sale agreement, he will be protected by law.

Example

John bought a vehicle from Billie for £5,000 in a good faith and without any notice or knowledge of any pending finance or hire-purchase agreement. The consumer law will protect John and he will be the rightful owner of the vehicle provided it can be proved that John has acted in good faith and without prior knowledge of the Hire-Purchase agreement.

Disclaimer

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legalally does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.

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