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The “Nemo dat quod non habet” rule safeguards the right of ownership.

However, there are some expectations to the rules. Explain.

In a certain circumstances, the “Nemo dat quod non habet” does not apply.
It is the situation where the buyer still get the title of owner even seller was
not the ultimate owner or do not have authority at all to sell.

The exception of “Nemo dat quod non habet” is estoppel. Where the
owner conduct makes it appear to the buyer that the person who sells the
gods has his authority to do and the buyer relies on that conduct, the buyer
obtains a good title because the owner is precluded by his conduct from
denying the seller’s authority to sell. According to section 27, sales of goods
act 1957, unless the owner of the goods is by his conduct precluded from,
denying the seller’s authority to sell. For example, Sarah tells Linda in front
of Dila that Sarah wants to sell Dila’s car to her and Dila nods his head and
keeps quiet. If Sarah sells the books to Linda, Dila cannot complain that
Sarah has sold her car without her authority. Refer to the case of N.Z
Securities v Wright cars LTD. This situation where B given a dishonored
cheque to the A for buying his car. A try to get back his loses. The car were
sold by B to C. then, A repossessed the car and C sue A for conversion. In
held by the court, C successful in claiming that A was precluded by his
conduct from denying B’s authority to sell. Therefore, the title has passed to
C.

Section 27, Sales Of Goods Act 1957 provides that where a mercantile
agent is, with the consent of the owner, in possession of the goods or of a
document of title of goods, any sale made by him when acting in the
ordinary course of business of a mercantile agent shall be as valid as if he
were expressly authorized by the owner of the goods to make the same.
However, the buyer must have acted in good faith and at the time of the
contract of sale, had not received notice that the seller has no authority to
sell. A ‘mercantile agent’ has been defined in section 2, of the Sales of Goods
Act 1957 as a mercantile agent having in the customary course of business
as such agent authority either to sell goods , or to consign goods for the
purpose of sale, or to buy goods, or raise money on the security of goods.
Examples of a mercantile agent would be a secondhand automobile dealer, a
broker, or an auctioneer. Example is Sarah hands over her car and registration book
to her boyfriend Redzuan, a second-hand car dealer, for safekeeping. Redzuan sells
Sarah’s car to Taufik who buy in good faith, without knowledge or notice of
Redzuan’s lack of authority. So, Taufik obtain good title to the car.
Goods may be owned by more than one person. In section 28, Sales of
Good Act
1957 provides that if one of several joint owners of goods has the sole
possession of the by permission of the co-workers, the property in the goods
is transferred to any person who buys them from such joint owner in good
faith and has not at the time of the contract of sale notice that the seller has
no authority to sell. The illustrates is Qila, Syasha and Leha jointly owned a
microwave oven. Qila was allowed to keep the oven and cook with it since
Syasha and Leha did not know how to cook. Qila, without Syasha and Leha
permission, sold the oven to Erin who did not know Qila’s lack of authority.
So, Erin would require a good title to the oven.

According to section 29 of the Sales of Goods Act 1957 provides that


where the seller of goods has obtained possession under a contact voidable
under section 19 and 20 of the contact Act 1950, but the contact has not
been rescinded at the time of the sale, the buyer requires a good title to the
goods provided he buys them in good faith and without notice of the seller’s
defect of title. A contact is voidable under section 19 and 20 of the contracts
Act 1950 when consent of the original owner is caused by coercion, fraud,
misrepresentation and undue influence. In example is when Yatie obtains
goods from Fika by coercion and sells them to Najwa, who buys them
innocently. At the time Najwa buys the goods, Fika has not rescinded the
contact by Yatie. So, Najwa obtain good title of the goods.

Section 30(1) of the Sales of Good Act 1957 provides that if a seller
continuous or in possession of the goods or of the document of title to the
goods, the delivery or transfer by that person or by mercantile agent acting
for him, of the goods or documents of title under any sale, pledge or other
disposition to any person receiving the same in good faith without notice
from previous sales, same effect as if the person make delivery or transfer
were expressly authorized by the owner of the goods to make the same. To
put it simply, the effect of section 30(1) above is if a seller resells to a
second buyer the good sold by him previously to the first buyer, the second
buyer will obtain the good title to the good if he has received in a good faith
and without notice of the previous sale. The first buyer will lose the title but
he can take legal action agaist the seller who would be liable to him. Refer
with Pacific Motor Auctions Pte LTD v Motor Credits (Hire Finance) LTD,
where the plaintiffs became owners of several cars in the possession of
dealer and under a ‘floor plan agreement’, the dealer would retain the cars
and sell them in the same way as it sold other cars. Whenever a car covered
by the plan was sold, the dealer would account to the plaintiffs for the money
received. When the plaintiffs discovered that the dealer was in financial
difficulties, they revoked his authority to sell. Nevertheless, the dealer went
ahead and sold a number of vehicles. The question was whether the buyer
obtained a good title as the dealer had no authority to sell. The court held
that the situation feel under this exception as the sellers was in continuous
possession after the sale. In addition, can also refer at cases of Worcester
Works v Coolen Engineering Co. LTD. It was held that it does not matter what
private arrangement may be made by the seller with the purchaser , such as
whether the seller remains bailee & trespasser or whether he is lawfully in
possession or not. It is sufficient if he remains continuously possession of the
goods that he has sold to the purchaser.
Section 30(2) of the Sales of Good Act 1957 provides that if a buyer,
having bought or agreed to buy goods, obtain with the consent of the seller
possession of the goods or the documents of title to the goods, the delivery
or transfer by that person or by a mercantile agent acting for him of he
goods or the document of title under any sale, pledge or disposition to any
person receiving the same in good faith and without notice or other right the
original seller in respect of the good shall have effect as if such lien or right
did not exist.
In other word if a buyer, having a bought or agreed to buy goods, obtain
possession of the goods or the document of title with the consent of the
seller, he can pass a good title to a subsequent buyer acting in good faith,
even if under the first transaction he has not obtained a good title. Refer to
the case in Newton of Wembley LTD v Williams. The plaintiffs sold a car to A
who paid by cheque. Although he was given possession, it was agreed that
the property would not pass until the cheque was honoured. The cheque was
dishonoured but A has resold the car to B who bought it without knowledge
of the position. B resold it to the defendant. The plaintiffs tried to recover the
car from him. The court held that A, the original buyer, was in possession
with the consent of the owner. Hence, he could pass a good title to B, who in
turn transferred it to the defendant. The defendant was, therefore, entitled
to keep the car.