Nemo dat quod non habet, literally meaning is nothing gives he who has nothing has.
Those buyers do not acquire any title if goods are bought from a person who is not the owner and does not sell them under the authority of the owner. It is a legal rule and sometimes we also called as nemo dat rule. In section 27, it can protect the right of the ownerships and buyers. Lim Chui Lai v Zeno 1964 30 MU 314 is one of the case that using this rule. Ahmad who was the contractor has secured a contract from Petaling Jaya Authority for the construction of culverts. The respondent company which is Zeno Ltd entered into an agreement with Ahmad. They had agreement to provide all the materials of the project to Ahmad and deliver the materials to the construction site.
However, Ahmad’s contracts with the Petaling Jaya authority were cancelled due to some problems. Zeno Ltd informed them that the materials on the site belonged to them. When Zeno Ltd was attempting to sell the materials, they discovered that the material had been sold by Ahmad to the appellant for $14,000 in which Ahmad had received $7,000 in part-payment. The respondent company then require the costs of material from the appellant.
Because of Ahmad was not the owner of the property and he just a bailee when the time he sold to the appellant. Since, Ahmad was not the owner, he had neither the title nor the authority to sell the property. Although, Ahmad insured the good, but it doesn’t mean that he was the owner. So, There was nothing a bailee could to do with the material. Therefore, appeal dismissed according to Sale of Good Acts 1957, section 27.
There are some exceptions to Nemo dat quod non habet. According to Section 27 of Sales of Goods Act 1957, the nemo dat rule is not applicable if the owner of the goods is by his conduct precluded from denying the seller’s authority to sell. Estoppel happens if the owner, by his conduct makes buyer believe that he has the authority to sell, buyer will acquire good title of goods.
In Folkes v King 1923 case, Folkes left his car with a mercantile agent and told him not to sell it below a certain price. The agent sold the car for less than the minimum price to King who bought the car in good faith and for valuable consideration without any notice for any fraud. The agent then disappeared with the money. Folkes sued King in order to recover his car. But the court held that the mercantile agent was in prosession of the car with the consent of the owner for the purpose of the sales and as the sale has been in the ordinary course of the agent’s business, the buyer received good title.
Therefore, Folkes cannot recover the car from king.
