#20302 - L8 Pt. 2 The Nemo Dat Principle And Its Exceptions Under The Sale Of Goods Act Sga 1979 And The Factors Act 1889. - Commercial Sales Law Lecture Notes

L8 Pt. 2: TheNemo Datprinciple and its exceptions under theSale of Goods Act (SGA) 1979and theFactors Act 1889.

1. The Nemo Dat Principle

• Direct Translation: "No one can transfer what he does not himself have".

• Statutory Basis (s 21(1) SGA): When goods are sold by a non-owner without the owner's consent or authority, the buyer acquires no better title than the seller had.

• Core Rule: If there is no right to sell, the buyer will not obtain good title (Farquharson Bros & Co v C King & Co).

2. Exception 1: Estoppel (s 21(1) SGA)

An owner is "precluded" (estopped) from denying a seller's authority to sell if their conduct or words suggested the seller had such authority.

Essential Elements

• Representation: The owner represented that the seller was an authorised agent or allowed the seller to appear as the owner.

• Voluntary: The representation must be made voluntarily.

• Reliance: The buyer must have relied on that representation (Farquharson Bros v King).

Types of Representation

• By Conduct: Mere possession of goods is not enough (Mercantile Bank of India Ltd v Central Bank of India Ltd).Key cases includeCentral Newbury Car Auctions Ltd v Unity Finance LtdandEastern Distributors Ltd v Goldring.

• By Words: Explicitly stating the seller has authority.Note that s 21(1) does not apply to a mere agreement to buy (Shaw v Commissioner of Metropolitan Police).

• By Negligence: A careless failure to act (e.g., failure to register a hire-purchase agreement) generally does not create estoppel (Moorgate Mercantile Co v Twitchings).

3. Exception 2: Sale under the Factors Act 1889 (s 2)

This exception protects buyers when amercantile agentexceeds their authority while selling or pledging goods.

Essential Elements

1. Mercantile Agent: Someone who, in the course of business, buys or sells goods for others (Lowther v Harris).

2. In Possession: The agent must have physical possession of the goods or documents of title at the time of the contract (Beverley Acceptances Ltd v Oakley).

3. Owner’s Consent: Possession must be with the owner's consent in the agent's capacity as a mercantile agent (Pearson v Rose & Young Ltd).Consent is deemed to continue even after termination unless the buyer has notice.

4. Ordinary Course of Business: The sale must happen during business hours at a proper place of business.Selling a car without its registration certificate is outside the ordinary course (Stadium Finance Ltd v Robbins).

5. Good Faith and Notice: The buyer must prove they acted in good faith without notice of the lack of authority (Heap v Motorists' Advisory Agency).

4. Exception 3: Sale Under a Voidable Title (s 23 SGA)

If a seller has a voidable title (often obtained through misrepresentation) that hasnot been avoidedat the time of the sale, the buyer acquires good title.

• Example:...