Mains Question Set IX

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Sale of Goods Act, 1930
Ques. Explain and illustrate the maxim “nemo dat quod non habet” with reference to the
Sale of Goods Act, 1930. Are there any exceptions to this maxim?
Answer:
Introduction
The provisions related to Sale of goods were originally provided under Indian Contract Act. Later
in 1930 it was repealed and a new enactment called Sale of Goods act 1930 was introduced due
to the advancement and increase in trade and transactions. Chapter III of the sale of goods act
1930 containing sections 18 to 30 deals with effects of the contract with regards to transfer of
property between seller and buyer.
Meaning of the maxim
The first of this principle is enshrined in the Latin maxim, nemo dat quod non habet, which
literally means no one can give what they do not have. In the context of sale of goods it means
no one can transfer a better title than he himself has. Section 27 of Sale of Goods Act, 1930
embodies this principle. Buyer gets no title when sale is by a person not the owner. This
generally happens in case of finder of lost goods sells the goods or in case of stolen goods or
goods in procession by an agent, it tries to misappropriate. In the sale of immovable property
and in contract of pledge also we can see the application of this Latin maxim. So the essence of
the maxim is only the real owner can pass a real good title to the buyer in sale.
Section 27, as a general rule, tries to protect the interest of the true owner when it provides
that where the goods are sold by a person who is not the owner thereof 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 has. The rule can be demonstrated by the case of Greenwood v
Bennett.[iii] In this case the original owner of a Jaguar car (Bennett) entrusted it to a man
named Searle for repairs to be carried out. Searle then used the car for his own purposes,
crashed it and caused extensive damage. Searle then sold the car to Harper, who owned a
garage, for £75. Harper did not realise that Searle was not the owner of the car. Harper then
spent £226 repairing the car and sold it on to a finance company. It was held by the court that
the car belonged to Bennett as Searle did not have title and could therefore not transfer that
title to Harper. For the same reason, Harper could not transfer title to the finance company.
Bennett was therefore able to recover the car but had to compensate Harper for the work done
to it. However, although the nemo dat rule in its essential form may be clear, it is not always fair,
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as it is an innocent party buyer who will suffer, and nor is it necessarily in keeping with the
needs of modern commerce and trade. Where goods are in question the buyer may be in a very
difficult position. The owner, in voluntarily parting with the possession of the goods, takes upon
himself the risk that something might happen to the goods.
Exceptions to the Nemo dat quod non habet rule
1. Transfer Of Title By Estoppel (Sec 27 ): Estoppel means that a person who by his conduct
or words leads another to believe that certain state of affairs existed, would be estopped from
denying later that such as state of affairs did not exist. The buyer in such case gets a better title
when that of the seller. The estoppel may arise in any of the following ways:
(i) The owner standing by, when the sale is effected, or
(ii) Still more, by his assisting the sale, or
(iii) By permitting goods to go into the possession of another with all the insignia
of possession thereof and apparent title, or
(iv) If he has otherwise acted or made representations so as to induce the buyer

to alter his position to his prejudice
2. Sale by A Mercantile Agent (Section 27): If a mercantile agent has an authority to sell
the goods and he does so, no difficulty arises because according to the general rule, an agent
having the authority to sell them can convey a good title. The difficulty arises when the
mercantile agent disposes of the goods without having authority to do so. For the application of
this proviso, the following condition are to be satisfied,-
(i) That the seller is a Mercantile agent as defined in Sec. 2(9) of the Act. Section
2(9) states that “mercantile agent” means a mercantile agent having in the
customary course of business as such agent authority either to sell goods, or to
consign goods for the purposes of sale, or to buy goods, or to raise money on the
security of goods;
(ii) The said mercantile agent got the possession of the goods or documents of
title to the goods with the consent of the owner, and in his capacity as a mercantile
agent;
(iii) While selling the goods he must have been acting in the ordinary course of
his business of a Mercantile agent;
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(iv) The buyer of the goods must have acted in good faith without having any
notice that such a Mercantile agent did not have an authority to sell.
3. Sale By Joint Owner (Section 28): If one of several joint owners of goods has the sole
possession of them by permission of the co-owners of goods has the sole possession of them by
permission of the co-owners, the property in the goods is transferred to any person who buys
them from such joint owner in good faith without notice of the fact that the seller has no
authority to sell. It may be noted that in the absence of this provision (i.e., Sec. 28) the buyer
would have obtained only the title of the co-owners and would have become merely a co-owner
with the other co-owners. Hence the provision constitutes an exception to the rule – “no one
can give what the has not got.”
4. Sale By A Person In Possession Under A Voidable Contract- (Section 29): According to

section 19 and 19- A of the Contract Act, if the consent of a party to the contract has been
obtained by coercion, fraud, misrepresentation or undue influence, the contract is voidable at
the option of the party whose consent has been so obtained. Section 29 provides that if a
person has obtained the possession of some goods under a contract which is voidable under
section 19 or 19 – A of the contract Act and he sells those goods before the contract has been
avoided by the party entitled to do so, the buyer of such goods acquire a good title to them. It
is, however, necessary that such buyer must have purchased the goods in good faith and
without the notice of the seller’s defect of title.
5. Sale by The Seller In Possession (Section 30) (1): If a seller has sold the goods and the
property in the goods has passed to the buyer, the seller cannot deal with such goods. If he is
still in possession of the goods and deals with them, the buyer can sue him for the tort of
conversion, Sec 30 (1), however, provides that if seller having sold the goods is still in possession
of the goods or of the documents of title to them, the delivery or transfer of the goods or of the
documents of title to them, the delivery or transfer of the goods or of the documents of title
under any sale, pledge or other disposition thereof by the seller or by a Mercantile agent on his
behalf will convey a good title to the buyer provided the buyer has been acting in good faith and
he has no notice of the previous sale.
6. Sale by The Buyer In Possession – Sec 30(2): Section 30(2) says that if a buyer has obtained the
possession of the goods or the documents of title to them with the consent of the seller, any sale, pledge
or other disposition thereof to any person will convey s good title and without any notice as regards any
lien or other right of the original seller in respect of those goods

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Sale of Goods Act, 1930

Meaning of the maxim

Exceptions to the Nemo dat quod non habet rule

(i) The owner standing by, when the sale is effected, or

(ii) Still more, by his assisting the sale, or

(iv) If he has otherwise acted or made representations so as to induce the buyer

4. Sale By A Person In Possession Under A Voidable Contract- (Section 29): According to

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