Let the buyer beware!
A general but well-established principle in law is the nemo dat rule. The full expression is in Latin, nemo dat quod non habet, and translates to “no one can pass a better title than they possess”. In the context of buying and selling goods, this means that a buyer of goods cannot obtain a better title to the goods than that of the sellor.
This general rule is also set out in the Sale of Goods Act, which provides:
“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 the owner’s conduct precluded from denying the seller’s authority to sell.”
The effect of this is that where goods are sold by a person who is not the owner and does not have the authority of the owner, the buyer does not acquire a good title. Where goods are stolen, the property remains that of the original owner despite there being intervening dealings.
The application of this rule becomes most important in the context of purchasing second-hand goods. People who are particularly at risk include people who buy goods from second-hand car dealerships, pawnshops Ebay or other online websites.
An exception exists to the general rule and it is where the owner of the goods is estopped from denying the authority of the seller. In other words, where the owner of the goods was not able or not afforded the opportunity to deny the seller’s authority to sell the goods, the buyer of the goods will obtain good title. For this exception to arise, there must have been some clear omission of the owner to take steps to prevent the sale. Mere inaction, silence or just carelessness in the protection of the property is not enough to prevent the owner from asserting his title to the goods.
This means when that unless you can show that there is some clear omission of the part of the actual owner of the goods it is very unlikely that any attempt to prevent the original owner from recovering the goods will be successful.
If you require legal assistance, please contact us at O’Brien, Connors & Kennett.
DISCLAIMER: The information contained in this article is general and is not intended to be advice on any matter. It is for information only and is not legal advice. In the event of a legal problem, you should seek legal advice.
