Introduction
The law starts from the policy of property protection expressed in the Latin nemo dat quod non habet. The maxim simply means “no one can give or transfer what he does not have.” It further insists that no one can pass a better title than what he has. The principle is embodied in the provision of section 23 of Law of sales of Goods Act, which is to the effect that where goods are sold by a non-owner and in fact without the original owner permission, the bonafide purchaser acquire no better title than the seller had unless and otherwise the owner is precluded from denying the sellers authority to sell the property.
It should be noted, that the seller may not be always the owner of the goods, sometimes he may have stolen them. Likewise, he may believe he is the owner when in fact he has been misled by the previous seller, and his buyer gets no better title than he has, then the goods are to be returned to the true owner and the buyer can then recover damages from the seller.
The above position is affirmed in the case of Rowland v Divall, where the claimant, a car dealer, bought a car from the defendant for £334. He painted the car and put it in his showroom and sold it to a customer for £400. Two months later the car was impounded by the police as it had been stolen. It was then returned to the original owner. It was therefore held that the defendant did not have the right to sell the goods as he did not obtain good title from the thief. Ownership remained with the original owner. The defendant had 2 months use of the car which he did not have to pay for and the claimant was not entitled to any compensation for the work carried out on the car.
As Lord Denning in Bishopsgate Motor Finance Corporation Ltd v Transport Brakes Ltd , stated that ‘in the development of our law, two principals have striven for mastery. The first is the protection of property: no one can give a better title than he himself possesses. The second is for the protection of commercial transactions: the person who takes in good faith and for value without notice should get better title. The first principle has held sway for a long time, but it has been modified by the common law itself and by statute so to meet the needs of our times.’
This quote is important since it establishes two important principles. On the one hand, the need to protect the proprietary right of the original owner since he had better title to the good than anyone else. On the other hand, the need to protect commercial transactions because the buyer takes the goods in good faith for the value offered to him. English Law seems to state that the general rule is in line with the protection of the original buyer’s rights, the law has developed several exceptions to this rule which includes but not limited to the followings: -
Estoppel, the exception of estoppel is used when the owner of the goods is refrained from the denying the seller’s authority as his conduct makes it appear to the buyer that the seller has the owner’s consent to sell the goods. Thus, the title of the property of the goods will be transferred to the buyer should he buy the goods. This exception is well enunciated in the case of Eastern Distributers Ltd v Goldring.
The second exception is the sale by a mercantile agent. This exception is stated in section 27 of the Sale of Goods Act. Any sale by the mercantile agent made in the normal course of business is valid as long as the agent had the consent by the owner of the goods which he has possession of. The sale is valid as though the agent had been expressly given the authority by the owner. But the buyer must have acted in good faith and no notice expressing that the seller was not authorized was obtained at the time of the contract. The same was explained In the case of Folkes v King.
The next exception to the rule is sale under a voidable title. This exception is provided under section 25 of the sales of Goods Act, goods obtained by the seller was under a voidable contract when the consent of the original owner is caused by elements under section 15 or 16 of Contracts Act. An example to explain this would be when A took the goods from B by coercion and sold it to C who bought it in good faith. The title of the property of the goods will be transferred to C.
Another exception to the rule is the sale by a seller in possession after sale. The provision that expresses this is section of 27 of the law of Sales of Goods Act. This provision means that should the seller sell the goods that was bought by a previous buyer but is still in the seller’s possession to a second buyer, the second buyer will obtain a good title to the goods he bought from the seller in good faith. The first buyer will lose his title on the goods but he is entitled to sue the seller who would be liable to him.
Other prominent exception to the aforesaid rule includes Sale by one of several joint owners who is in possession of goods by permission of the co-owners; here the buyer in good faith gets good title to the goods. Market overt-Open market, where when goods are sold under an open market recognized by the law, the bonafide purchaser obtains a better title as per Section 24 of the law of sales of Goods Act, And lastly Sale by unpaid seller who exercises his right to lien, or stoppage in transit to resell the goods as stipulated under section 40-49 of the Law of sales of Goods Act.
Generally, despite the fact that the rule need to protect the proprietary right of the original owner since he had better title to the good than anyone else but on the other hand the need to protect commercial transactions because the buyer takes the goods in good faith for the value offered to him, however the first principle has held sway for a long time, but it has been modified by the common law itself and by statute so as to meet the needs of our own times.
REFERENCE
BOOKS
Rawlings, P., (2007). Commercial Law. University of London Press: London.
Okany M. C., (2001). Nigerian Commercial Law. University Press: Lagos
STATUTE
The Law of Sales of Goods Act [Cap 214 R.E 2002]
The Law of Contract Act [Cap 345 R.E 2002]
