Title to Property

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Question:
Identify the principle Lord Denning was discussing in Bishopgate Motor Finance Corporation Limited v Transport brakes limited and clearly explain how the principle has been modified by common law and statute.

AUTHOR: KATALILO JOY

INTRODUCTION

This paper will identify the principle Lord Denning was discussing in Bishopgate Motor Finance Corporation Limited v Transport brakes limited and clearly explain how the principle has been modified by common law and statute.

The principle Lord Denning was discussing in the case stated above relates to the sale of goods and is aimed at protecting individual property. It is common to find persons selling goods to which they hold no title at all and have no consent or authority from the owners. This occurs when either the goods being sold are stolen or have been gotten from the owner by deception. The buyer of such goods is usually innocent and may not have notice of the defective ownership held by the seller. The resulting situation is determining who has the title to the goods between the two innocent parties i.e the original owner of the goods and the innocent buyer of the said goods. This situation is properly resolved by the question of whether a person without title to the goods can pass title to anyone who buys the goods from him. This is thus the principle that the Lord Denning was discussing in Bishopgate Motor Finance Corporation Limited v Transport brakes limited. It is an established principle that “the transferee of goods cannot get better title than that of the transferor”. The principle is a common law rule called nemo dat quod non habet.

Nemo dat quod non habet is latin which means that if goods are sold by a person who does not have title to the goods then he would be unable to pass title to a subsequent purchaser since he did not have title to begin with. The rule is supported by Section 21 (1) of the Sale of goods Act 1979 states that “Subject to this act, where goods are sold by a person who is not their owner, 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”[1].

The statute above cements the fact that no one can pass title to another if he does not has it in the first place. A thief that has stolen or a rogue that has come into possession of a property dubiously has no title to such property and thus cannot pass title to the person who purchases such property even in good faith.

In the case of Rowland v Divall[2] the claimant, a car dealer, bought a car from the defendant for £334. He painted the car and put it in his showroom and sold it to a customer for £400. Two months later the car was impounded by the police as it had been stolen. It was then returned to the original owner. Both the claimant and defendant were unaware that the car had been stolen. The claimant returned the £400 to the customer and brought a claim against the defendant under the Sale of Goods Act.

It was held that the defendant did not have the right to sell the goods as he did not obtain good title from the thief. Ownership remained with the original owner. The defendant had 2 months use of the car which he did not have to pay for and the claimant was not entitled to any compensation for the work carried out on the car. The above being the case modifications to the above principle have taken place to protect a buyer involved in a commercial transaction. The modifications have been through statutes and common law itself. Under these modifications a person having no title or a defective title to the property can pass title to the purchaser.

The most obvious situation under the exceptions to the nemo dat rule is the market overt exception. This is the oldest exception under common law which has now been...
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