TRANSFER OF PROPERTY BY NON OWNER
CONTENTS
1.0. Introduction.
2.0. Objective.
- Main
- Nemo Dat Quod Non Habet
- General Exception
4.0. Conclusion
5.0. Summary
6.0. Tutor Marked Assignments (TMA)
7.0. References/Further Readings.
INTRODUCTION
In some situations, a person who has either no property or whose rights are defective disposes of goods in circumstances that enable the innocent buyer to acquire rights to the exclusion of the true owner. Generally a person cannot transfer a better title than he has himself. This is captured in the latin maxim nemo dat quod non habeat which means that no one can give what he or she does not have. The purpose of this rule is to protect the interest of the property owners.
However, there cases where seller either fraudulently or through their misrepresentations, express or implied, have allowed innocent third parties who are unaware of the defect in the title deal with such sellers or their agent in respect of the goods for value. The need to protect such innocent parties and for the preservation of commercial transactions the exception to the general rule has evolved over the years.
OBJECTIVE
In this unit learners are expected to be able to give an impressive and well reviewed concept of Transfer of Property by “Non-Owner” and identify the relevant section under the Act.
MAIN BODY
NEMO DAT QUOD NON HABEAT
As a general rule, a person who buys goods from someone other than the owner of the goods will not obtain good title to them, and it makes no difference if he acted in good faith.
If a seller of goods has no property in the goods and does not sell with the prior consent or authority of the owner, then he cannot transfer a good title in the goods. This general rule is expressed in the latin maxim nemo dat quod non habeat (no one can give what he has not got). The Act in Section 21(1) states that where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had.
But the owner can bring an action under the Torts (Interference with Goods) Act 1977, against anyone who has wrongful possession of the goods.
Such a situation could occur where a thief sells a stolen car to an innocent purchaser, or a person misguidedly sells to an innocent buyer a car that is the subject of a hire purchase contract and is therefore the property of the finance company.
In effect, the main point of Section 21 is that a person who is not the owner of a property cannot transfer title.
In Hollins v. Fowler (1875) L.R.7 H.L 757, a Liverpool broker, Hollins, purchased cotton from another broker, Bayley, who had obtained it from Fowler, the owner, without title in circumstances of fraud. Hollins purchased the cotton in good faith and sold and delivered it to a manufacturer. In this instance Fowler was held liable, when sued for conversion.
Note that the Section 21 (1) in the later part of it states that unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell, then the buyer in that case will have a good title.
An agreement to sell before the seller gets a good title, does not preclude the buyer after the seller has got a good title. In Anderson v. Ryan, a car dealer agreed to sell a car to which he had no title, but before the car was delivered he had obtained title. It was held that Section 21 did not apply because for the original agreement was not a sale but only an agreement to sell. It seems that, even if the seller had purported to sell the car before he had obtained title, his subsequent acquisition of the title would have gone to feed the contract.
GENERAL EXCEPTION
SALE UNDER AGENCY
The main exception under this head is the sale by an agent and is provider by Section 21 Rule 1. It states that an innocent buyer would acquire a good title where the seller sells under the authority or consent of the owner. In this instance, it means that a sale by an agent without actual authority will give the purchaser a good title if the sale is within the agent’s apparent or usual authority.
In essence, the principle of agency may permit a seller who is not the owner to transfer title to the buyer. The rule is further emphasized in Section 61 (2) that
“the rules of common law including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, and in particular the rules relating to the law of principal and agent… shall continue to apply to contracts for the sale of goods”.
In Bishopsgate Motor Finance Corporation Ltd v. Transport Brakes Ltd (1949) 1 KB 322, Denning LJ explained that in the development of law, two principles have striven for mastery. The first is for the protection of property, no one can give a better title than he himself possesses. The second is for the protection of commercial transaction: the person who takes in good faith and for value without notice should get a good title.
Note that the first condition can be overridden by the second.
CONCLUSION
In conclusion, merely being in possession of goods or even document of titles does not in itself, amount to the person having a good title to sell. However, one of the main exceptions to this is where the person has authority to sell, either genuine or otherwise.
Section 21 (1) of the Act has done a great deal in protecting the owner of the goods from fraudsters, while section 61 (1) of the Act also protects the innocent buyer with good faith through the principle of Principal and Agent relationships.
This is done to protect commercial transaction.
SUMMARY
The general rule is that a buyer cannot acquire a better title than that of the seller. This rule can be overridden in particular situations where someone, who takes in good faith and for value without notice, will acquire good title and will, therefore, be able to resist the claims of the original owner.
TUTOR MARKED ASSIGNMENT (TMA)
- What general principles apply where a person acquires goods from a person who is not the
- Briefly explain the principles in Bishopgate Motors v. Transport Brakes Ltd, as enunciated by Denning
REFERENCES/FURTHER READING
- Sale of Goods
- Rawlings, (2007) Commercial Law University Of London Press
- Okany (1992) Nigerian Commercial Law, Africana .FEP Publishers
- Hire Purchase Act, CAP 169
- O.Sofowora, General Principles of Business and Coop Law, (1999) Soft Associates.