The general rule of law, as stated by Willes. J., is that no one can
transfer a better title than what he himself possesses. This is expressed by
the maxim nemo dat quod non habet. As opined by Denning LJ, this principle
held sway for a long time but it has been modified by the common law itself and
by statute so as to meet the needs of our times. The judicial standing of
this legal principle has been analyzed in light of the Sale of Goods Act, 1930.
Section 27 of the Sale of Goods Act, 1930 expresses the general proposition
that no one can give what he has not got, and if one deals with the goods of
another without his authority, the transaction is as against that other nugatory
in law. A person, therefore, however innocent, who buys goods from someone
who is not the owner, obtains no property whatsoever.
Section 27 of the Sale of Goods Act, 1930-
Sale by person not the owner.—Subject to the provisions of this Act and of any
other law for the time being in force, 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.
This section protects the interests of the owner by laying down the principle
that when a person who is not the true owner of the goods, sells them without
the consent or under the authority of the true owner, the title acquired by the
buyer is no better than what the seller had.
In Farquharson Bros & Co v. King & Co
, it was observed that if a watch or a
ring was left by the owner in a café or a seat in a park, the finder cannot say
that it was the owner’s carelessness and nothing else that enabled the finder to
pass off the said watch or ring as his own.
Hence, where a stolen horse was sold at a public auction, the fact of theft not
being known to either the buyer or the auctioneer; where a person obtained
goods under a hire-purchase agreement and sold them; where the goods were
sold by a person who obtained them on approval, subject to the condition that
property would not pass until paid for; whereby pledge, a person had
obtained goods under a forged document and then sold them off, in all these
cases, the buyer could not get a good title.
The buyer’s title would be subject to the same defect as the seller’s if the
seller’s title is also defective. This rule simply implies that the buyer’s
title cannot be better than the seller’s title. If stolen goods are disposed
of by a seller, the buyer’s title over the goods would be the same as the
Similarly, when a person who had taken goods on a hire- purchase basis and sold
them off before paying all his installments, it was held that on default of
payment, the owner could recover the goods from the new buyer in the same manner
as he could have recovered them from the person who had been given the goods in
the first place.
The owner of a car delivered it for repairs. The repairer carried out no repairs
but instead kept using the car until it crashed. He then sold the car in the
damaged state to an innocent buyer for a nominal price. The buyer got the car
repaired at an expenditure of 226 pounds. The owner was entitled to recover the
car from the buyer but by paying him 226 pounds.
When the harshness of the nemo dat quod non habet rule was realized, several
exceptions were developed through precedents and added by statutes. These
exceptions only apply to those buyers who acquire goods in good faith, without
the knowledge of the rights of the true owner. The nemo dat rule does not apply
to these exeptions.
EstoppelAfter declaring in the first paragraph that a purchase of goods from a person
who had no authority to sell confers no good title, Section 27 of the Sale of
Goods Act, 1930 concludes with the remark that the purchaser might get a
good title if the owner of the goods is by his conduct precluded from denying
the seller’s authority to sell. These words refer to the estoppel of the
When the owner is not permitted to deny the seller’s authority that is known as
an estoppel against him. Estoppel may arise from an act or omission to
fulfil a legal obligation or due to negligence resulting in the disregard of
obligations owed towards another.
i. Estoppel by act or omission-An omission to perform one’s duty may create an estoppel provided that the duty
is a legal obligation. The estoppel can arise in any of the following ways:
a) By the owner standing by when the sale is effected.
b) By the owner assisting the sale of the goods.
c) By the owner’s permission for the goods to go into the possession of
d) If the owner acts or makes representations so as to induce the buyer to
alter his position to his prejudice.
In Mercantile Bank v. Central Bank, the respondent bank advanced money to a
firm of merchants, on the pledge of railway receipts. The bank then handed the
railway receipts back to the merchants for the specific purpose of clearing the
goods and storing them in the bank’s godown. The merchants, instead of doing so,
repledged the receipts with the appellant bank. On merchant’s default to pay the
money back, a question of priority arose between these two banks with regard to
the pledged railway receipts with these two banks.
The appellant bank argued
that the omission of the respondent from impressing their stamp on the receipts
before returning them enabled the merchants to do so and hence, the respondent
should be estopped from the denial of the second pledge’s validity. The Privy
Council held that Mercantile Bank’s title over the receipts was subject to that
of Central Bank since Central Bank’s omission to impress stamp did not create a
legal estoppels as it was not a legal duty in the first place.
In Mohambaram v. Ram Narayan, an owner of a bus engaged A as his agent to
ply the bus for hire and left a duly signed letter addressed to the District
Magistrate requesting to grant G permit to A. The registration certificate of
the bus was also left with A. A fraudulently altered the letter into one
addressed to the DSP requesting him to transfer the registration in his name,
which having been done, A sold the bus to a stranger who was ignorant about A’s
real title. The owner challenged the buyer’s title. It was held that the owner
could not have contemplated the possibility of fraud of A. The true owner was
not precluded under Section 27 of the Sale of Goods Act, 1930 from
challenging the title acquired by the buyer.
ii. Estoppel by Negligence-Where the owner of goods, by reason of his negligence or negligent failure to
act, allows the seller of the goods to appear to the buyer as the true owner or
as having the true owner’s authority to sell the goods, an estoppel by
negligence is created against the owner. It must be shown that the owner of
the goods had a duty to take care so as not to act negligently for this kind of
estoppel to arise.
Sir Rupert Cross on EVIDENCE opined- There is, however, a type of estoppel, often called estoppel by negligence
in which the party in whose favour it operates is the victim of the fraud of
some third person facilitated by the careless breach of duty of the other
In Coventry Shepherd & Co. v. Great Eastern Railway Co, Great Eastern
Railway, for a consignment of goods, carelessly issued two orders for its
delivery. A, to whom the delivery orders were issued obtained an advance from
Coventry Shepherd for the delivery order. It was held that Great Eastern Railway
was estopped as against A and could not deny that the goods in the delivery
order were held on behalf of the assignor.
Sir Rupert Cross commented on this case- Someone who puts documents of this
nature into circulation owes a duty to those into whose hands they may
In Heap v. Motorists Advisory Agency Ltd., Lush J opined-
Negligence, in order to give rise to a defence under this section must be more
than mere carelessness on the part of a person in the conduct of his own
affairs, and must amount to a disregard of his obligations towards the person
who is setting up the defence.
Heap allowed his car to be taken by A to show it to a potential customer. A used
the car for a few weeks and then sold it to Motorists Advisory Agency, the
defendant. A claimed the car from the defendant and the Agency claimed estoppels
against A. The court held that A was entitled to take his car back from the
defendants as A was not negligent as he did not breach any duty that he owed to
the defendant, rather, he was just not very careful.
Failure to register a transaction where registration is compulsory may lead to
an estoppel by negligence. In Moorgate Mercantile Co. Ltd, v. Twitchings, A obtained possession of a car from Moorgate on hire purchase.
There was failure by Moorgate to register the hire purchase agreement with a
private registration service offered by Hire Purchase Information Ltd. A offered
to sell the vehicle to a dealer called Twitchings who bought it after finding no
record of any prior hire-purchase transaction in the files of Hire Purchase
Information Ltd. Twitchings resold the car. On discovering the sale to
Twitchings, Moorgate sued him for damages for conversion. The defence was
estoppel by negligence in the failure of Moorgate to have the prior
hire-purchase agreement with A registered with the Hire Purchase Information
Where a car and its registration books were taken away from the owner by a
swindler under a fake hire- purchase agreement, the buyer could not get a good
title from him. However, where the owner of a car delivered signed forms to
a person which enabled him to pretend to the buyer that he had the owner’s
authority to sell his car, it was held that the owner was estopped from
disputing the buyer’s title.
Sale by Mercantile Agent
Proviso to Section 27 of the Sale of Goods Act, 1930 states-Where a mercantile agent is, with the consent of the owner, in possession of
the goods or of a document of title to the 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 authorised by the owner of the goods to make the
same, provided that the buyer act is good faith and has not at the time of
the contract of sale notice that the seller has no authority to sell.
Folkes v King illustrates the protection that this section affords to an
innocent purchaser from a mercantile agent. The plaintiff entrusted his car to a
mercantile agent for sale at a stated price and not below that. He sold it to X
below that price and misappropriated the proceeds. X resold the car to the
defendant. The plaintiff could not recover it from the defendant. X got a good
title from the mercantile agent and be conveyed a good title to the defendant.
A conveyance through documents of title to the goods is equally effective
against the true owner. In Commonwealth Trust Ltd v Akotey, the certain
quantity of cocoa was consigned by railway to a merchant for which he had
already received the consignment notes. The consignor believed that the merchant
would buy it on the agreed price. The merchant disposed of the goods by
transferring the consignment notes. The buyer acquired a good title.
However, for the application of the above stated proviso, the following
conditions must be fulfilled- i. The seller must be a mercantile agent as
per Section 2(9) of the Sale of Goods Act, 1930 which states- 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
ii. He must be in possession of the documents
or goods with the consent of the owner.
iii. He must be acting in the ordinary course of
business as a mercantile agent when the sale is made by him.
iv. At the time of sale, the buyer must be
unknown to the fact that the seller does not have the authority to sell.
v. The buyer must act in good faith.
If these conditions are not satisfied, the sale would not be valid. In Pearson
v. Rose & Young Ltd, P left his car with a mercantile agent and authorized
him to only receive offers and not to sell. The agent obtained possession of the
registration books from P without his consent and then promptly sold the car to
the defendants. It was held that a sale without the registration books would not
have been a good sale and the registration books were obtained without the
consent of the owner and therefore, the buyer did not acquire a good title.
Sale by one of the Joint-owners
Section 28 of the Sale of Goods Act, 1930 states-
If one of several joint 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 of 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
Ordinarily, a co-owner could transfer his share only and hence this section
enables a co-owner to sell not only his own share but also of his other
co-owners. This section lays down three conditions for validating a sale by
i. He must be in sole possession by
permission of his co-owners.
ii. The purchaser must act in good faith.
iii. The purchaser must have had no notice at
the time of the contract of sale that the seller had no authority to sell.
A, B and C have certain cattle in common. A is left by B and C in possession of
a cow which he sells to D. D purchases the cow in good faith. The title over the
cow is transferred to D.
This section also applies to Joint Hindu families. A was member of a joint
hindu family and sold a clock which was in the possession of the family. The
sale was held to be valid since A acquired the title over the clock as a member
of the family and the sale was on behalf of the family.
Sale by person in possession under voidable contract
Section 29 of the Sale of Goods Act, 1930 states-
When the seller of goods has obtained possession thereof under a contract
voidable under section 19 or section 19A of the Indian Contract Act, 1872 (9
of 1872), but the contract has not been rescinded at the time of the sale,
the buyer acquires a good title to the goods, provided he buys them in good
faith and without notice of the seller’s defect of title.
In other words, the present section validates a sale by a person who has
obtained possession of goods under a contract voidable at the option of the
other party as per section 19 or section 19A of the Indian Contract Act
on the grounds of coercion as defined in section 15, fraud as defined in
section 17, misrepresentation as defined under section 18 or undue
influence as defined under section 16, provided that the contract has not
been rescinded by the other party at the time of sale.
This section lays down three conditions for validating a sale by person in
possession under a voidable contract: i. The goods must have been obtained by the
seller under a voidable contract and not a void contract.
ii. The contract must not have been rescinded
at the time of the sale.
iii. The buyer must have acted in good faith and
must not have had notice of the seller’s defective title.
In Phillips v. Brooks, a fraudulent person posed himself to be a respectable
person and obtained a valuable ring by giving a worthless cheque. Before the
fraud could be discovered, the fraud had pledged the ring with a bona fide
pledgee. It was held that the pledgee had a good title over the ring.
The Court of Appeal held in Lewis v. Averay that in cases where a person
parts with his goods without waiting for the cheque to be cleared, should take
the loss. In this case, the car owner handed over his car for a dud cheque and
was not allowed to take it back from a bona fide buyer.
Sale by Seller in possession after sale
Section 30(1) of the Sale of Goods Act, 1930 states-
Where a person, having sold goods, continues or is in possession of the
goods or of the documents of title to the goods, the delivery or transfer by
that person or by a mercantile agent acting for him of the goods or
documents of title under any sale, pledge o other disposition thereof to any
person receiving the same in good faith and without notice of the previous
sale shall have the same effect as if the person making the delivery to
transfer were expressly authorised by the owner of the gods to make the
The following conditions must be satisfied to enable a seller to pass a good title: i. The seller must continue to be in
possession of the goods or of the documents of title to the goods as a seller.
Possession as a hirer or bailee of the goods from the buyer after delivery of
the goods to him will not do.
ii. The goods must have been delivered to the
buyer or the documents of title must have been transferred to him.
iii. Good faith and absence of notice of the
previous sale on the part of the second buyer.
In Staffs Motor Guarantee Ltd v British Wagon Co Ltd the owner of a lorry
sold it to the defendants and took it back on hire-purchase. He then resold it
to the plaintiffs. It was held that the latter could not get a good title
because the seller was not in possession as seller but as a bailee under a
However, it is not necessary that the seller should be in personal possession of
the goods. It is enough that the goods are at his disposal even if they are in
the custody of a warehouse keeper. In City Fur Manufacturing Co v Fureenbond
(Brokers) London Ltd, H purchased a number of skins from a broker. The goods
remained in the broker’s warehouse pending payment. H sold them to the
plaintiffs who gave him a bill of exchange to enable him to pay the broker and
arrange delivery to the plaintiffs. Instead, H pledged the goods with the
defendants. The defendants were held to have acquired a good title.
Sale by Buyer in possession before sale
Section 30(2) of the Sale of Goods Act, 1930 states-
Where a person, having bought or agreed to buy goods, obtains 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 the goods or documents of title under any sale, pledge or
other disposition thereof to any person receiving the same in good faith and
without notice of any lien or other right of the original seller in respect
of the gods shall have effect as if such lien or right did not exist.
The following conditions must be satisfied to enable the buyer to pass a good
title: i. The buyer must be in possession of the
goods or documents with the consent of the seller.
ii. The goods must have been delivered to the
buyer or the documents of title transferred to him.
iii. There must be good faith and absence of
notice of the seller’s right of property on the part of the second buyer.
In Marten v. Whale, the plaintiff agreed to buy a plot of land from one T in
return for a car subject to the condition that his solicitor approved the title
to land. Before anything was done in this connection, the plaintiff gave the
possession of his car to T, who sold it to the defendant, the latter acting in
good faith. It was held that the car was in the possession of a person who had
agreed to buy it and, therefore, the defendant acquired good title.
Re-sale by an Unpaid Seller
Section 54(2) of the Sale of Goods Act, 1930 states-
"Where the goods are of a perishable nature, or where the unpaid seller who
has exercised his right of lien or stoppage in transit gives notices to the
buyer of his intentions to re-sell, the unpaid seller may, if the buyer does
not within a reasonable time pay or tender the price, re-sell the goods
within a reasonable time and recover from the original buyer damages for any
loss occasioned by his breach of contract, but the buyer shall not be
entitled to any profit which may occur on the re-sale. If such notice is not
given, the unpaid seller shall not be entitled to recover such damages and
the buyer shall be entitled to the profit, if any, on the re-sale.
The term perishable means not only physically perishable but also in a
commercial sense becoming unmerchantable. For instance, dates becoming
impregnated with sewage and in such a condition is no longer merchantable as
dates or cement becoming so wet so as to lose its properties as cement.
In R.V. Ward Ltd v. Bignall, there was a contract for the sale of two cars
for 850 pounds. Buyer deposited 25 pounds but did not pay the price despite a
reasonable notice. The seller tried to resell but could only find a buyer for
one of the cars and sold it for 359 pounds. He then claimed damages of 475
pounds representing the balance price and advertising expenses. It was held that
he could only recover advertising expenses and the shortfall in the price of the
The court held that when the seller resells the goods, the contract is
rescinded and the goods once again become his property.
Section 54(3) of the Sale of Goods Act, 1930 states-Where an
unpaid seller who has exercised his right of lien or stoppage in transit
re-sells the goods, the buyer acquires a good title thereto as against the
original buyer, notwithstanding that no notice of the re-sale has been given
to the original buyer.
Under Section 54(3), on a re-sale by the unpaid seller, the purchaser acquires a
good title thereto as against the original buyer, even if no notice of re-sale
has been given to him. This, as it should be, for the original buyer being in
default, is not entitled to the possession of the goods, and therefore cannot
sue to recover the goods or their value.
The principle ‘no one can transfer a better title than what he himself
possesses’ as laid down by Willes J. as a general rule of law in the case
Whistler v. Forster is not an absolute right granted to the true owner of
the goods. This legal principle has with time, developed certain exceptions
through precedents that later became part of legislations to benefit the
innocent buyer who used to suffer loss without any default on his part due to
this principle and expanded the ambit for the application of this principle.
Now, Nemo dat quod non habet and its exceptions are used under various statutes
such as Indian Contract Act, 1872, Sale of Goods Act, 1930, Civil Procedure
Code, 1908, Companies Act, 2013, Negotiable Instruments Act, 1881, etc. These
- Sale by mercantile agent
- Sale by one of the joint owners
- Sale by a person in possession under voidable contract
- Sale by seller in possession after sale
- Sale by buyer in possession before sale
- Re-sale by an unpaid seller
- Sale by finder of goods pursuant to the provisions of Section 169 of the
Indian Contract Act, 1872.
- Sale by a pawnee due to default of pawnor
under his power of sale as per Section 176 of the Indian Contract Act, 1872.
- Sale by a Court Receiver under his powers as per the Civil Procedure
- Sale by a master of the ship in case of necessity.
- Sale by a mortgagor in possession to a buyer without notice of
- Sale by Liquidators under the Companies Act, 2013.
- Sale by Endorser to a Holder under Negotiable Instruments Act, 1881.
 Whistler v. Forster (1863) 32 L.J.C.P. pp. 161, 164.
 Bishopsgate Motor Finance Corpn Ltd v. Transport Brakes Ltd,  1 KB
 Section 27, The Sale of Goods Act, Act no. 03 of 1930.
 Hollins v. Fowler (1875) LR 7 HL 757.
 BENJAMIN, SALE OF GOODS 11 (Sweet & Maxwell 2017).
 Supra note 3.
 Farquharson Bros & Co v. King & Co,  AC 325.
 Ibid at 326.
 Leo v. Bayes, (1856) 18 CB
 Helby v. Matthews,  AC 471.
Edwards v. Vaughan, (1910) 26 TLR 545.
 Purshottam Das v. Union of India, AIR 1967 All 549.
 JUSTICE K RAMAMOORTHY, THE SALE OF GOODS ACT 232 (Pollock & Mulla 2002).
 Belsize Motor Supply co. V Cox. (1914) 1 K.B 244.
 Greenwood v. Bennet,  1 QB 195.
 AVTAR SINGH, LAW OF SALE OF GOODS AND HIRE PURCHASE 122- 123 (Eastern Book
 supra note 3.
 H.S. PATHAK, MULLA SALE OF GOODS ACT AND THE INDIAN PARTNERSHIP ACT 64
 AVTAR, supra note 16, at 123.
 Greg v. Wells, (1839) 10 A&E 90.
 Waller v. Drakeford, (1853) 1 E&B 749.
 Eastern Distributors Ltd. v. Goldring,  2 QB 600.
 Woodley v. Coventry, (1863) 2 H&C 164.
 Mercantile Bank v. Central Bank, AIR 1938 PC 52.
 Mohambaram v. Ram Narayan, AIR 1935 Mad 850.
 Supra note 3.
 Supra note 25.
 ERIC BASKIND, GREG OSBORNE, LEE ROACH, COMMERCIAL LAW 273 (Oxford
University Press 2016).
 ERIC BASKIND, COMMERCIAL LAW CONCENTRATE 96 (Oxford University Press 2016).
 SIR RUPERT CROSS, EVIDENCE 304 (Butterworths 1974).
Coventry Shepherd & Co. v. Great Eastern Railway Co, (1883) 11 QBD 776.
 RUPERT CROSS, supra note 32.
 Heap v. Motorists Advisory Agency Ltd.,  1 KB 577.
 AVTAR SINGH, supra note 16, at 124.
 Moorgate Mercantile Co. Ltd v. Twitchings,  AC 190.
 Central Newbury Car Auctions Ltd v. Unity Finance Ltd,  1 QB 371.
 Supra note 24.
 Supra note 3.
 Folkes v. King,  1 KB 282.
 Commonwealth Trust Ltd v. Akotey, 1926 AC 72.
 AVTAR SINGH, supra note 16, at 125-127.
Sale of Goods Act, supra note 3, at Section 2(9).
 Pearson v. Rose & Young Ltd,  1 KB 275.
 Sale of Goods Act, supra note 3, at Section 28.
 H.S. Pathak, supra note 18, at 70.
 Dr. Madhusudan Saharay, Universal Law Publishing 2010, TEXTBOOK ON SALE OF
GOODS AND HIRE PURCHASE
 Taruck Chunder Poddar v. Jodeshur Chunder Kondoo, (1873) 11 BLR 193.
Sale of Goods Act, supra note 3, at Section 29.
 Section 19, The Indian Contract Act, Act no. 09 of 1872.
 Ibid at Section 19A.
 Ibid at Section 15.
 Ibid at Section 17.
 Ibid at Section 18.
 Ibid at Section 16.
 H.S. PATHAK, supra note 18, at 71.
 AVTAR SINGH, supra note 16, at 129.
 Phillips v. Brooks,  2 KB 243.
 Lewis v. Averay,  2 WLR 603.
 Sale of Goods Act, supra note 3, at Section 30(1).
 H.S. PATHAK, supra note 18, at 73.
 Parbati Devi Bagla v. Lachminarayan, (1957) A Cal 551.
 Staffs Motor Guarantee Ltd v. British Wagon Co Ltd,  2 KB 305.
 City Fur Manufacturing Co v. Fureenbond London Ltd,  1 All ER 199.
 Sale of Goods Act, supra note 3, at Section 30(2).
 H.S. PATHAK, supra note 18, at 73.
 Capital and Counties Bank Ltd v. Warriner, (1896) 12 TLR 216.
 Marten v. Whale,  2 KB 480.
 Sale of Goods Act, supra note 3, at Section 54(2).
 Afsar & Co v. Blundell, (1896) 1 Q.B. 123.
 Duthie v. Hilton, (1868) L.R. 4 C.P. 138.
 R.V. Ward Ltd v. Bignall,  2 All ER 449.
 Sale of Goods Act, supra note 3, at Section 54(2).
 H.S. PATHAK, supra note 18, at 114.
 Whistler v. Forster, supra note 1.
 Indian Contract Act, supra note 54, at Section 169.
 Indian Contract Act, supra note 54, at Section 176.
 Order 40, Code of Civil Procedure, Act no. 05 of 1908.
 H.S. PATHAK, supra note 18, at 65.
 Section 352, Companies Act, Act No. 18 of 2013.