- Nemo dat quod non habet
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Nemo dat quod non habet, literally meaning "no one [can] give what he does not have" is a legal rule, sometimes called the nemo dat rule, that states that the purchase of a possession from someone who has no ownership right to it also denies the purchaser any ownership title. This rule usually stays valid even if the purchaser does not know that the seller has no right to claim ownership of the object of the transaction (a bona fide purchaser); however it is often difficult for courts to make judgments as in many cases there is more than one innocent party. As a result of this there are numerous exceptions to the general rule which aim to give a degree of protection to bona fide purchasers as well as original owners.
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United States
In American law, a bona fide purchaser who unknowingly purchases and subsequently sells stolen goods will, at common law, be held liable in trover for the full market value of those goods as of the date of conversion. Since the true owner retains legal title, this is true even in a chain of successive bona fide purchasers (i.e., the true owner can successfully sue the fifth bona fide purchaser in trover). However, there is a remedy for successive bona fide purchasers. If the jurisdiction recognises an implied warranty that the seller has title to the property (Article 2 of the Uniform Commercial Code (UCC) in the United States), the bona fide purchaser can sue the seller for breach of that implied warranty. There are also other various exceptions traditionally recognised in courts of equity, which likely gave rise to the idea embodied in the modern UCC.
This rule is exemplified in circumstances such as the Holocaust reconciliation movement where property, such as works of art, that was stolen or confiscated by the Nazis is returned to the families of the original owners. Anyone who purchased the art or thought they had ownership are denied any rights over the litigious property due to the nemo dat rule.
There are numerous exceptions to the nemo dat rule. Legal tender, for example, does not adhere to the rule in certain circumstances. If a rogue buys goods from a bona fide merchant, that merchant will not have to return the bills to the true owner. To hold the rule to be otherwise would be disruptive to the economy and prevent the free flow of goods in an economy. The same may be true of other "negotiable" instruments, such as cheques. If a thief A steals a cheque from B and sells it to innocent C, C is entitled to deal with the cheque, and A cannot claim it back from C (though the name appearing on the cheque may affect the validity of such a transfer).
Another matter is the transfer of other legal rights normally granted by ownership. In 2011, a US District judge ruled that a woman who had purchased a stolen laptop could sue a device tracking company for invasion of privacy stemming from recording software installed on the laptop to facilitate its recovery after being stolen[1]. This ruling demonstrated that bona fide purchasers are entitled to some rights by virtue of possession alone, or that nemo dat is superseded by the bona fide purchaser's right to privacy.
Recording statutes
When dealing with real property, most American jurisdictions have codified recording statutes that will enable subsequent purchasers to divest title from the party with common law title if they qualify for protection under the recording statute. Three varieties of recording statutes exist: 1) Race statutes, 2) Notice statutes, and 3) Race-Notice statutes.
A race statute will divest common law title from a person with superior title if the subsequent purchaser recorded their deed prior to the person with superior title. A notice statute will divest common law title from a person with superior title if the subsequent purchaser had no notice (either actual or constructive - otherwise known as bona fide) of the true owner's title. A race-notice statute requires a subsequent purchaser to be bona fide and record first.
English law
The original owner can obtain protection against the former owner through the doctrine of estoppel (see also, s 21(1) of the Sale of Goods Act 1979 '...unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell). Methods of the estoppel can be by words, by conduct, or by negligence.
Estoppel by words, or representation by a seller through words that he is the true owner or has the owner's authority to sell:
- Henderson & Co v Williams [1895] 1 QB 521
- Shaw v Commissioner of Metropolitan Police [1987] 1 WLR 1332, following Henderson
Estoppel by conduct:
- Farquharson Bros v J King & Co Ltd [1902] AC 325
- Mercantile Bank of India Ltd v Central Bank of India [1938] AC 287, upholding Farquharson
- Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371
Mistake about identity:
- Shogun Finance Ltd v Hudson [2003] UKHL 62
References
- ^ Zetter, Kim (2011-08-31). "Couple can sue laptop-tracking company for spying on sex chats". wired.com. http://arstechnica.com/tech-policy/news/2011/08/couple-can-sue-laptop-tracking-company-for-spying-on-sex-chats.ars. Retrieved 2011-08-31.
See also
Categories:- Latin legal terms
- Property law
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