The “Nemo dat quod non habet” rule safeguards the right of ownership. However, there are some expectations to the rules. Explain. In a certain circumstances, the “Nemo dat quod non habet” does not apply. It is the situation where the buyer still get the title of owner even seller was not the ultimate owner or do not have authority at all to sell. The exception of “Nemo dat quod non habet” is estoppel. Where the owner conduct makes it appear to the buyer that the person who sells the gods has his authority to do and the buyer relies on that conduct, the buyer obtains a good title because the owner is precluded by his conduct from denying the seller’s authority to sell. According to section 27, sales of goods act 1957, unless the owner of the goods is by his conduct precluded from, denying the seller’s authority to sell. For example, Sarah tells Linda in front of Dila that Sarah wants to sell Dila’s car to her and Dila nods his head and keeps quiet. If Sarah sells the books to Linda, Dila cannot complain that Sarah has sold her car without her authority. Refer to the case of N.Z Securities v Wright cars LTD. This situation where B given a dishonored cheque to the A for buying his car. A try to get back his loses. The car were sold by B to C. then, A repossessed the car and C sue A for conversion. In held by the court, C successful in claiming that A was precluded by his conduct from denying B’s authority to sell. Therefore, the title has passed to C. Section 27, Sales Of Goods Act 1957 provides that where a mercantile agent is, with the consent of the owner, in possession of the goods or of a document of title of goods, any sale made by him when acting in the ordinary course of business of a mercantile agent shall be as valid as if he were expressly authorized by the owner of the goods to make the same. However, the buyer must have acted in good faith and at the time of the contract of sale, had not received notice that the seller has no authority to sell. A ‘mercantile agent’ has been defined in section 2, of the Sales of Goods Act 1957 as a mercantile agent having in the customary course of business as such agent authority either to sell goods , or to consign goods for the purpose of sale, or to buy goods, or raise money on the security of goods. Examples of a mercantile agent would be a secondhand automobile dealer, a broker, or an auctioneer. Example is Sarah hands over her car and registration book to her boyfriend Redzuan, a second-hand car dealer, for safekeeping. Redzuan sells Sarah’s car to Taufik who buy in good faith, without knowledge or notice of Redzuan’s lack of authority. So, Taufik obtain good title to the car.
Goods may be owned by more than one person. In section 28, Sales of Good Act 1957 provides that if one of several joint owners of goods has the sole possession of the by permission of the co-workers, the property in the goods is transferred to any person who buys them from 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. The illustrates is Qila, Syasha and Leha jointly owned a microwave oven. Qila was allowed to keep the oven and cook with it since Syasha and Leha did not know how to cook. Qila, without Syasha and Leha permission, sold the oven to Erin who did not know Qila’s lack of authority. So, Erin would require a good title to the oven. According to section 29 of the Sales of Goods Act 1957 provides that where the seller of goods has obtained possession under a contact voidable under section 19 and 20 of the contact Act 1950, but the contact has not been rescinded at the time of the sale, the buyer requires a good title to the goods provided he buys them in good faith and without notice of the seller’s defect of title. A contact is voidable under section 19 and 20 of the contracts Act 1950 when consent of the original owner is caused by coercion, fraud, misrepresentation and undue influence. In example is when Yatie obtains goods from Fika by coercion and sells them to Najwa, who buys them innocently. At the time Najwa buys the goods, Fika has not rescinded the contact by Yatie. So, Najwa obtain good title of the goods. Section 30(1) of the Sales of Good Act 1957 provides that if a seller continuous or in possession of the goods or of the document of title to the goods, the delivery or transfer by that person or by mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other disposition to any person receiving the same in good faith without notice from previous sales, same effect as if the person make delivery or transfer were expressly authorized by the owner of the goods to make the same. To put it simply, the effect of section 30(1) above is if a seller resells to a second buyer the good sold by him previously to the first buyer, the second buyer will obtain the good title to the good if he has received in a good faith and without notice of the previous sale. The first buyer will lose the title but he can take legal action agaist the seller who would be liable to him. Refer with Pacific Motor Auctions Pte LTD v Motor Credits (Hire Finance) LTD, where the plaintiffs became owners of several cars in the possession of dealer and under a ‘floor plan agreement’, the dealer would retain the cars and sell them in the same way as it sold other cars. Whenever a car covered
by the plan was sold, the dealer would account to the plaintiffs for the money received. When the plaintiffs discovered that the dealer was in financial difficulties, they revoked his authority to sell. Nevertheless, the dealer went ahead and sold a number of vehicles. The question was whether the buyer obtained a good title as the dealer had no authority to sell. The court held that the situation feel under this exception as the sellers was in continuous possession after the sale. In addition, can also refer at cases of Worcester Works v Coolen Engineering Co. LTD. It was held that it does not matter what private arrangement may be made by the seller with the purchaser , such as whether the seller remains bailee & trespasser or whether he is lawfully in possession or not. It is sufficient if he remains continuously possession of the goods that he has sold to the purchaser. Section 30(2) of the Sales of Good Act 1957 provides that if a buyer, having bought or agreed to buy goods, obtain with the consent of the seller possession of the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him of he goods or the document of title under any sale, pledge or disposition to any person receiving the same in good faith and without notice or other right the original seller in respect of the good shall have effect as if such lien or right did not exist. In other word if a buyer, having a bought or agreed to buy goods, obtain possession of the goods or the document of title with the consent of the seller, he can pass a good title to a subsequent buyer acting in good faith, even if under the first transaction he has not obtained a good title. Refer to the case in Newton of Wembley LTD v Williams. The plaintiffs sold a car to A who paid by cheque. Although he was given possession, it was agreed that the property would not pass until the cheque was honoured. The cheque was dishonoured but A has resold the car to B who bought it without knowledge of the position. B resold it to the defendant. The plaintiffs tried to recover the car from him. The court held that A, the original buyer, was in possession with the consent of the owner. Hence, he could pass a good title to B, who in turn transferred it to the defendant. The defendant was, therefore, entitled to keep the car.
