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EXCEPTIONS TO NEMO DAT


Estoppel


The first exception is provided by the doctrine of estoppel which is embodied in the concluding words of S. 23 “… unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.”  This provision takes us back to the common law doctrine of estoppel for it gives no indication when the owner is precluded from denying the seller’s authority to sell.  However there are two distinct cases where the owner is so precluded.  The first is where he has by his words or conduct represented to the buyer that the seller is the true owner, or has the owner’s authority to sell, and the second is where the owner, by his negligent failure to act, allows the seller to appear as the owner or as having the owner’s authority to sell.  These are called estoppel by representation and estoppel by negligence respectively.

REPRESENTATION BY NEGLIGENCE
 A person may make a representation by words or by conduct, but how does a person make a representation by negligence?  This is really a representation through an omission.  A person who negligently omits to inform another of certain facts may be said to be representing that the facts calling for report do not exist.  Again, a person who omits to correct a misrepresentation made by a third party may in certain circumstances be treated as responsible for that representation.  Thus if A stands by while B makes a representation to C which A knows to be incorrect, and which he has a duty to correct, A may be said, loosely to be guilty of misrepresentation by negligence.


ESTOPPEL BY WORDS

A good example of estoppel by words is the decision of the Court of Appeal in Henderson & Co V Williams in this case, G & Co. were induced by the fraud of one F to sell him goods lying in certain warehouses of which the defendants were warehousemen.  The circumstances were such that the contract between G & Co and F was void for mistake.  On the instructions of G & Co, the defendants transferred the goods in their books to the order of F.  F sold the goods to the plaintiffs who, being suspicious of the bona fides of the seller, made inquiries of the defendants.  The latter supplied the plaintiffs with a written statement that they held the goods to the order of F, and when this did not satisfy them, they endorsed it with a further statement that they now held the goods to the plaintiffs’ order.  G & Co., not having been paid by F, instructed the defendants not to deliver the goods to the plaintiffs but to themselves, and they gave them an indemnity against so doing.  It was held that both G & Co. and the defendants were estopped from denying the plaintiffs’ right to the goods, the former because they had represented that F was the owner by ordering the defendants to transfer the goods into his name in their books, and the latter because they had attorned to the plaintiffs, that is represented to them, that they held the goods to their order.

                                                           
Section 23 – 27 of the Sale of Goods Act.


Constitutional right of every person to private property and the need to promote international and national commerce at the same time protecting individual rights to own property.  All these issues are balanced in nemo dat.

The basic rule in nemo dat is that a person who is not an owner of goods or who does not sell those goods under the authority or consent of the owner cannot pass a better title than she/he had.

Section 23 (1) you find the first exception to that rule
Cap 31 Section 23 (1) states as follows: -
                  “Subject to the provisions of this Act, where 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 had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.”
 The proviso starts with where it says …unless the

When we look at nemo dat as a topic, the take off point is that a person who is not the owner of goods cannot sell or pass a better title than the owner.  Even though you are not the owner you can sell and pass a good title if you have the consent of the owner.

The problem with nemo dat is that it was developed with the aim to do justice, we are not talking about fairness, and we are talking about justice.   Fairness is substantive, justice is procedural.   Nemo dat rule balances justice or the legal rules being followed and then fairness on the other hand – i.e. are the social ethos endorsed as the right thing to do? 

In the nemo dat rule, we are balancing between justices for 2 innocent parties each claiming ownership or title to the same goods and asserting that he/she has a better claim on those goods than the other party.  The problem can arise in any of the following
1.            Where a thief steals goods and sells those goods to someone else who buys in good faith, for value and without notice;
2.            Where a swindler buys goods and induces the seller to let him have possession of the goods on credit and he promptly resells or pledges those goods for whatever he can get;

3.            Where the person hands goods to an agent to obtain quotations for those goods and the agent sells those goods without authority or disposes of the proceeds of the sale;

4.            Where a person sells goods, transferring the property in the goods but retains the possession of the goods and then fraudulently resells those goods to a third party.

In all these scenarios, the law has to choose between upholding the rights to private property of the owners to the goods and this right is a constitutional right, which is protected that one cannot lose property in their goods.  Legal rights to private property are protected while at the same time trying to promote national and international trade.  You have 2 innocent persons claiming title to the goods and therefore you have to look at the nemo dat rule and you are saying that the basic rule is that a person cannot give that which he/she does not have.  If you have no ownership of goods you cannot pretend to sell those goods to another person.

The court is now caught up in the exercise of protecting the owner of the goods while at the same time protecting buyers who buy in good faith and without notice.

 
 
 

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