INTRODUCTION
The
nemo dat quod non habet rule, a cornerstone of property law, asserts that one
cannot transfer a better title than one possess. This principle safeguards the
rights of true property owners, ensuring that their property cannot be
transferred without their consent. However, this rule often clashes with the
bona fide purchaser rule, which aims to protect innocent purchasers who acquire
property in good faith and for value, without notice of any prior claims. The
conflict between these two principles arises when the true owner and the bona
fide purchaser are innocent, each with legitimate claims to the property.
Resolving this conflict requires a delicate balance between upholding the sanctity
of ownership and fostering trust in commercial transactions. Various legal
exceptions and statutory modifications have been developed to address this
tension, reflecting the ongoing effort to harmonize this competing interest in
property law. This article will explore the nature of this conflict, its implications,
and the legal mechanism developed to address it.
NATURE
OF THE CONFLICT
The
nemo dat rule and the bona fide purchaser rule represent two competing
interests, it is worth stating that the nemo dat rule represents the common
law’s traditional favouring of property rights, while the bona fide purchaser
rule is an equitable principal rule designed to protect good faith purchasers.
When a property is sold by someone who does not have the right to sell it, the
true owner and the bona fide purchaser both have legitimate claims. The nemo
dat rule would protect it. This creates a legal dilemma, as both parties are
innocent and deserving of protection, in the case of Bishopsgate
Motor Finance Corp Ltd v Transport Brakes Ltd [1949] 1 KB 322,
Lord Denning highlighted this conflict, stating that the law must balance the
protection of property with the protection of commercial transactions. He noted
that while the nemo dat rule protects true owners, the bona fide purchaser rule
ensures the security of commercial transactions.
LEGAL
IMPLICATIONS
The
nemo dat rule ensures that property cannot be transferred without the true
owner’s consent, thereby safeguarding ownership rights. This principle is
crucial in maintaining the integrity of property transactions and preventing
unauthorised transfers. In the case of Clement
Mweempe v the Attorney General, International Police & Another [2012] ZMSC
29 affirms that a person selling property on behalf of the owner
should have the authority of the owner, this points out that consent of the
owner is important in any commercial transaction
The
bona fide purchaser rule protects innocent purchasers who act in good faith and
without notice of any prior claims. This principle is essential for fostering
trust and confidence in commercial transactions as it ensures that buyers can
rely on the apparent ownership of sellers in the case of Banda and Another
v Mudimba (HP/A 39 of 20100 [2011] ZMHC 75 the High Court ruled in
favour of the appellant, affirming their status as bona fide purchasers. The
court found that they had purchased the property in good faith and without
notice of any competing claims, this case reinforces the protection afforded to
bona fide purchasers, ensuring that those who acquire property in good faith
and for value are protected against prior undisclosed claims.
EXCEPTIONS AND MODIFICATIONS TO THE NEMO DAT RULE
There
are instances where a person can sell the property without the owner’s consent
and the buyer will be deemed to be the bona fide purchaser of the property, the
following are some of the exceptions to the nemo dat rule.
1. Estoppel:
where goods are sold by a non-owner who does not sell them under the authority
of the owner the buyer acquires no better title than the seller unless the
owner of the goods is by his conduct precluded from denying the seller
authority to sell this is affirmed by section 21 of the Sale of Goods Act
1893 and in Eastern Distributors ltd v.
Goldring (1957) 2 QB 600 the
court held that Eastern Distributors ltd was estopped from denying Murphy’s
authority to sell the van. The court found that by providing the necessary
documents, the finance company had enabled Murphy to appear as the owner, thus
misleading third parties. This case illustrates the application of the estoppel
exception to the nemo dat rule, where the true owner is prevented from denying
the seller's authority due to their actions.
2. Market
Overt: purchases made in an open market may provide the buyer with a good
title, even if the seller did not have the right to sell. This exception
recognizes the importance of protecting commercial transactions conducted in
good faith this is affirmed by section 22 of the Sale of Goods Act 1893
and in the case of Lee v Bayes (1856) 18 CB 601
the court stated that the term ‘market overt’ only applies to an open
public and legally constituted market open between the hours of sunrise and
sunset and where goods for sale are openly or publicly displayed.
3. Sale
by Agent:
An agent who sells on behalf of his principal will pass good title if the agent
has authority to do so and, in some cases, the agent may have implied authority
to sell the goods, especially if the owner’s conduct suggests that the agent
has authority. The Factors Act 1889 and
section 8 provide that a sale by a mercantile agent, acting in the
ordinary course of business, can pass a good title to the buyer, provided the
buyer acts in good faith and without notice of any defect in the agent’s
authority. Section 21 of the Sale of Goods Act states that a
buyer acquires no better title than the seller had unless the owner of the
goods is by his conduct precluded from denying the seller’s authority to sell.
In the case of Folkes v King 1923 a
car dealer sold a car on behalf of the owner. The buyer acquired a good title
because the dealer had the authority to sell the car this illustrates the
exception of sale by an agent.
CONCLUSION
The
conflict between the nemo dat rule and the bona fide purchaser rule is a
complex issue that requires a careful balance between protecting true ownership
and protecting good faith purchasers. Legal exceptions and statutory
modifications have been developed to address this conflict, reflecting the
dynamic nature of property law and the need to adapt to changing commercial
realities.
BIBLIOGRAPHY
STATUTES
Factors
Act 1889
Sale
of Goods Act 1893
CASES
Banda
and another v Mudimba (HP/A 39 of 20100 [2011] ZMHC 75
Bishopsgate
Motor Finance Corp Ltd v Transport Brakes Ltd [1949] 1 KB 322
Clement
Mweempe v the Attorney General, International Police & Another [2012] ZMSC
29
Eastern
Distributors ltd v. Goldring (1957) 2 QB 600
Folkes
v King 1923
Lee
v Bayes (1856) 18 CB 601
This Article is Brought to you by:
LEGAL AID INITIATIVE
(Access to Knowledge)
About the Authors:
Kachana Katazo is a third year student at the University of Zambia and serving as the Projects Manager of Legal Aid Initiative.