In relation to the Sale of Goods Act: i) Discuss the maxim “nemo dat quod non habet” ii) Highlight two important principles of the above maxim Outline the exceptions to the maxim referred to in (a) (i) above

In relation to the Sale of goods Act

1. 1. Explain the maxim nemo dat quod non habet

• The common law rule of nemo dat quod non habet, literally means one cannot give what he has not.
• It means that a seller of goods cannot give the buyer thereof a better title than he himself has in the goods.
• This rule was developed by the common law to protect the interests of the true owners of goods.
• The rule is now embodies in section 23 (1) of the Sale of Goods Act Cap 31, which provide inter alia“….where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with consent of the owner, the buyer acquires no better title than the seller had……..”
• This rule is best illustrated by the decision in Cundy V. Lindsay and Company Ltd. Where a person who had acquired goods fraudulently purported to sell them to appellant.  It was held that the apparent had no title in the goods as the fraudulent person had non to pass to him.

1. Important principles of the above maxim

The principle to protect the interest of the true owner of the goods. It was the case in Cundy v Lindsay & Co.

The principle of classical conflict between the interests of the owner and the bonafide purchaser which was enunciated by Lord Denning in Bishopsgate Motor Finance Corporation vs Transport Brakes Ltd

Consequently, if the goods had been obtained by fraud and the seller had a voidable title thereto, the buyer would acquire a voidable title even if he were not aware of the fraud. If the seller had a valid title, the buyer would get a valid title.

iii) Exceptions to nemo dat quod non habet

• Estoppels: under section 23 (1) of the Act, if the true owner of the goods, holdout some other person as owner and third parties deal with the person as owner, the true owner is estopped from denying the sellers authority to sell and the purchase acquires a good life.
• Sale of factor or Mercantile agent: this is an agent who is entrusted with possession of goods and who sells in his own name. If a mercantile agent in possession of the principals goods sells them to a third party in the ordinarily course of business and the third party takes the goods in good faith for value without notice he acquires a good title.
• Resale by seller is possession: under sec 26(1) of the Sale of Goods Act, if a seller who has already sold goods but retains their possession resells them to a bonafide purchaser who takes them in good faith for value without notice, of the previous the sale, he acquires a good title.
• Sale of buyer in possession: under sec 26 (2) of the Act, if a person who has agreed to buy goods obtain their possession or documents of title before ownership passes to him and as a consequence he sells to a bonafide purchaser who takes in good faith without notice of the original sellers Lien he acquires a good title.
• Sale under voidable title: under sec. 24 of the Act, if sellers title is voidable, but he sells the goods to a bonafide purchaser before the title is avoided and the purchaser takes in good faith for value without notice of the sellers defective title, the purchases acquires a good title. As was the case in Phillip V. Brooks.
• Sale under statutory power: A sale made in exercise of a power conferred by statute, passes a good title.  For example: Sale by a liquidator under the Companies Act. and Sale under the Disposal of Uncollected Goods Act.

Sale by a charge or mortgagee under the Registered Land Act.

• Sale under common law power: A sale made in exercise of a power conferred by the common law passes a good title for example sale by an agent of necessity or by a pledge.
• Sale by court order: A sale made pursuant to an order made by a court of competent jurisdiction passes a good title
• Sale in Market Overt: market overt means “open, public and legally constituted market.” This the oldest exception to Nemo dat but does not apply in Kenya.  At common law, buyers in market overt acquired a good title even in relation to stolen goods provided that: The buyer took them in good faith without notice of any defect in title and and The sale took place in public place.