Institute of National

Public
Administration

2ND YEAR FIRST SEMESTER. ASSIGNMENT 1

PROGRAM OF STUDY: BACHELOR OF LAWS

COURSE: COMMERCIAL LAW.

COURSE CODE: LLB2020.

LECTURER: MR. C. MUSATWE.

STUDENT: EVARISTO PHIRI.

STUDENT NUMBER: 29005823.

DUE DATE: 31/03/2023.

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Introduction.
This writing serves to discuss the principle of the sale of goods which is commonly known as
‘nemo dat quod non habet’ rule. The discussion will include the exceptions which are available to
the rule.
The ‘nemo dat quod non habet’ rule.
This is a Latin Maxim which means that you cannot give what you do not have. In other words, it
means that a buyer cannot acquire a better title to the goods than what the seller had. 1 The rule is
enshrined in section 21 (1) of the sale of goods Act 1979and it states that: where goods are sold by
a person who is not their owner, and who does not sell them under the authority or consent of the
owner, the buyer acquires no better title to the goods than what the seller had, unless the owner of
the goods is by his conduct precluded from denying the seller’s authority to sell. The rule means
that a person who is not the owner of a property cannot transfer title. The concept of the rule serves
to protect the interest of the real owner of the property.
The rule was applied in the case of Greenwood v Bennett (1973) 1.Q.B 195.2 Bennett owned a
Jaguar car and delivered it to Searle for servicing. But Searle used the car for his own purpose and
crushed and damaged the car. He later sold the car in its damaged state to Harper at 75 pounds.
Harper bought the car in good faith and spent 226 pounds to repair the car and sold it to the Finance
Company. The court held that Bennett was the owner of the car because Searle did not have title
to the car and he could not transfer any title to the buyer.
The application of the rule was further explained in case of Hollins v Fowler (1875) L.R.7.H.L
757. Facts of the matter are that a Broker, Mr. Bayley, who is a third party, got 13 bales of cotton
from Mr. Fowler in a fraudulent way and gave them to Hollins who was also a Broker. Hollins
was aware of the fraud, but he sold the bales to the manufacturer and got his commission. Mr.
Fowler sued for conversion. Judgment was in his favour. Hollins appealed against the ruling of the
lower Court. The Court of Appeal held that Hollins was liable because he was aware of the fraud
and did not have title to transfer the goods.
The nemo dat rule was also applied in the similar case of Rajan Patel v The Attorney General
(SCZ) 14 of 2002 ZMSC 40. The Appellant bought a Mercedes Benz Car from Humphrey Musonda

1
Rex, Ahdar, “the buyer in possession exception to nemo dat rule revised”, Canterbury law review, Volume 4,
University of Otago, 1989. www.austlii.edujournals.
2
Elham, Balavar, “the doctrine of nemo dat quod non habet and its exceptions”, Islamic Asad University, 2014.
www.textroad.com

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and Patrick Kangwa. The Appellant saw all necessary documents and he believed that the seller
was the real owner of the Car. After seeking Legal counsel from his Lawyer and the Police, the
Appellant bought the Car at $28, 000. The transaction took place at the shop of the Appellant.
Some days later, it was discovered that the Car was stolen from the Republic of South Africa.
Interpol was involved in the process of recovering the Car. The Zambia police possessed the Car
and later sent it to South Africa. The Appellant sued the state for his money spent to buy the car.
Judgment was in favour of the State. He appealed against the ruling. The Court of Appeal held that
the thief who stole the Car from South Africa had no title to the Car, therefore, he could not transfer
any good title to the buyer. The Court further stated that where goods are sold in the market,
according to the usage of the market, the buyer carries good title to the goods provided that he
buys them in good faith and without notice of any defect or want of title on the part of the seller.
The Court informed the Appellant that he did not buy the car from a market overt. The Court
defined a market overt an open, public, and legally constituted place. Appeal was dismissed.
Exceptions to nemo dat rule.
Exceptions are instances or situations in which the above mentioned rule does not apply. In other
words, it means that the seller of goods may have bad title to the goods but he may still transfer
good title to the buyer. The exceptions are provided for in section 27 (1) of sale of goods Act of
1930. The exceptions only apply to the buyer who meet the following requirements: the original
owner of the goods must have made statements or conduct that the seller was entitled to sell the
goods, the statements must have been made intentionally or negligently, the statements or conduct
must have misled the innocent buyer; and the innocent buyer must have bought the goods in good
faith, without notice of any defect of title on the part of the seller. The following are the applicable
exceptions to the rule:
Sale under voidable title.
This exception is in accordance with section 23 of the sale of goods Act, 1979. Which state that:
“when the seller of goods has a voidable title thereto, but his title has not been avoided at the time
of sale, the buyer acquires good title to the goods, provided he buys them in good faith and without
any notice of the seller’s defect of title.” Voidable title means that someone has obtained goods
under a contract voidable of fraud. And he or she sells the goods before it is established that he or
she is the legal owner of the goods. In such circumstances, the buyer acquires good title to the
goods.

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The exception was applied in the case of Lewis v Averay [1972] 1 QB 198. Facts are that the
Plaintiff had sold his car to the third party by cheque. And the defendant bought the car in good
faith from the third party. Later the Plaintiff discovered that the cheque bounced and that the sale
of car contract to the third party was fraudulent. Unfortunately the third party had already resold
the car to the defendant. The plaintiff sued the defendant for his car. The Court held that the
defendant bought the car in good faith and the third party had voidable title to the car pending the
failure of the cheque. Therefore, the defendant had acquired good title to the car.

Sale by Mercantile Agent.3

According to Section 21 (2) (a) of the sale of goods Act 1979. The nemo dat rule does not apply
to goods sold under the provisions of Section 1 (1) (d) of the Factors Act 1988, which defines a
Mercantile Agent as a person whose normal business is to receive goods as an Agent for the
purpose of selling them. But a person who helps a friend to sell goods is not a Mercantile Agent.
A mercantile agent has to be in possession of the goods with the consent of the owner and the
buyer must buy in good faith.
The exception was applied in the case of Pearson v Rose and Young Ltd (1950) 2All ER 1027.
Facts are that the Plaintiff delivered his car to the Mercantile Agent to get offers. But the Mercantile
Agent had intentions to sell the car. So he tricked the Plaintiff to leave with him the registration
book. In the absence of the Plaintiff, the Mercantile Agent sold the car the third party. The plaintiff
sued the Mercantile Agent for his car. The court held that the Mercantile Agent was liable because
although he was in possession of both the car and registration book, the registration book remained
in his possession without the consent of the Plaintiff.
For the innocent buyer to obtain good title in goods purchased from a mercantile agent, the
following requirement must be satisfied: the seller must be a mercantile agent, the mercantile agent
must be in possession of the goods or documents of title at the time of selling the goods, the
mercantile agent must be in possession of the goods or documents of title with the consent of the
owner, the mercantile agent in disposing of the goods must act in his ordinary course of business;
and the buyer of goods must buy in good faith without notice of the agent’s lack of authority to
sale.

3
Olamide, olanrewaju, “ownership and passage of property” https://djetlawyer.com

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Transfer of title by estoppel.
The exception of estoppel is in line with the last sentence of Section 21 (1) of the sale of goods
Act 1979. And it states that: “unless the owner of the goods is by his conduct precluded from
denying the seller’s authority to sell.” This means that in an event that the owner of goods conduct
himself in any way that indicates that another person is his agent, although no such agency exists
in fact, the doctrine of estoppel stops the owner from denying the existence of his agent authority
to act on his behalf with regard to the goods. For example, if Mr. ‘A’ is the owner of the goods,
but he has allowed Mr. ‘B’ to have his name written on the goods with the intentions to convince
the general public that Mr. ‘B’ is the real owner of the goods when in fact not. In an event Mr. ‘B’
sells the goods to Mr. ‘C’, Mr. ‘A’ will not deny the existence of authority to sell. And Mr. ‘C’
would have acquired good title to the goods.
Sale in a market overt.
This exception is supported by Section 22 (1) of the sale of goods Act 1979. It is stated that; “where
goods are sold in market overt, according to the usage of the market, the buyer acquires the good
title to the goods, provided he buys them in good faith and without notice of any defect or want of
title on the part of the seller.” In the case of Lee v Bayes (1856) CB 599. Market overt was defined
as, “an open, public and legally constituted place.” For the exception to be valid, goods must be
bought in good faith and within the normal operating hours of the market overt. And goods must
be bought in accordance with the usage of the market. For example, a market for food stuffs is not
market overt for selling and buying cars. And in the case of Bishopsgate motor finance corporation
v transport brakes Ltd (1949) 1 KB 322. Lord Justice Denning stated that one of the purposes of
the exception of market overt is to protect commercial transactions. He added that the practice in
the market overt of following sales to be conducted privately within the market after an auction
had failed was sufficient to constitute usage of the market within the meaning of the provision.
Sale under any special common law and statutory power of sale. (Sale under court order)
Section 21 (2) (b) of the sale of goods Act 1979. Supports sale under court order. Therefore, anyone
who buys goods under court order acquires good title to the goods. The exception of sale under
court order was applied and explained in the case of Mbanugo v U.A.C (1961) All NLR 775. Facts
are that the third party bought a Lorry on hire purchase from the defendant. He changed the
registration number of the Lorry before making the last installment. Later bailiffs came to seize
the Lorry under a writ of attachment obtained by a judgment creditor against the hirer. No claim

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regarding the Lorry was made to the bailiffs. Later the bailiffs sold the Lorry to the Plaintiff
through auction sale. The Plaintiff bought in good faith and without knowledge that the third part
had interest in the Lorry. The defendant discovered that the Plaintiff was in possession of the Lorry.
The defendant seized the Lorry. The Plaintiff sued for the return of the Lorry. The court held that
a sale by sheriff is not a sale in market overt, but where any goods in the possession of a judgment
debtor at the time of seizure by a sheriff or other officer charged with the enforcement of a writ,
warrant or other processes of execution, are sold, without any claim having been made to the
goods, the purchaser acquires good title.
Sale by one of the joint owners.
According to Section 28 of the sale of goods Act 1930, goods that are owned by co-owners and
are in possession by one of the joint owners, with the consent of other co-owners, if the person in
possession sells them; and the buyer buys them in good faith without notice of any defect of title
on the part of the seller, the buyer acquires good title.

Sale by a seller in possession after sale.4

This exception is in line with Section 25 (1) of the sale of goods Act 1979. It states that: the seller
who sells goods but still remains in possession of the same goods; and resells the goods to another
buyer; and the buyer buys in good faith without notice of the previous sale, the buyer has acquired
good title to the goods.
Sale by a buyer in possession after sale.
The exception is supported by Section 25 (2) of the sale of goods Act 1979. “If the buyer agrees
to buy goods and obtains their possession or document of title before paying for them. If he sells
the goods, and the buyer buys in good faith without notice of the original seller, the buyer has
acquired good title to the goods. Buyer in possession does not just mean being in custody of the
goods, but it includes being in control of the goods of documents of title.
Summary.
The nemo dat rule has the exceptions of sale under voidable title, sale by mercantile agent, transfer
of title by estoppel, sale in market overt, sale under court order, sale by seller/buyer in possession
after sale; and sale by one of the joint owners.

4
Kumar, Hariharan, “nemo dat quod non habet”, Divy Durgesh Sinha CNLV, 2015.

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BIBLIOGRAPHY
JOURNAL ARTICLES
Ahdar, Rex, “the buyer in possession exception to nemo dat rule revised”, Canterbury law review,
Volume 4, University of Otago, 1989. www.austlii.edujournals.
Balavar, Elham, “the doctrine of nemo dat quod non habet and its exceptions”, Islamic Asad
University, 2014. www.textroad.com
Hariharan, Kumar, “nemo dat quod non habet”, Divy Durgesh Sinha CNLV, 2015.
CASES
Bishopsgate motor finance corporation v transport brakes Ltd (1949) 1 KB 322.
Greenwood v Bennett (1973) 1.Q.B 195
Hollins v Fowler (1875) L.R.7.H.L 757.
Lee v Bayes (1856) CB 599.
Lewis v Averay [1972] 1 QB 198.
Mbanugo v U.A.C (1961) All NLR 775.
Pearson v Rose and Young Ltd (1950) 2All ER 1027
Rajan Patel v The Attorney General (SCZ) 14 of 2002 ZMSC 40.
STATUTES
Section 21 (1) of the sale of goods Act 1979.
Section 21 (2) (a) of the sale of goods Act 1979.
Section 21 (2) (b) of the sale of goods Act 1979.
Section 22 (1) of the sale of goods Act 1979
Section 25 (1) of the sale of goods Act 1979.
Section 25 (2) of the sale of goods Act 1979
Section 27 (1) of sale of goods Act of 1930.
Section 1 (1) of the Factors Act 1988

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