Nemo dat quod non habet
Encyclopedia
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
Ownership
Ownership is the state or fact of exclusive rights and control over property, which may be an object, land/real estate or intellectual property. Ownership involves multiple rights, collectively referred to as title, which may be separated and held by different parties. The concept of ownership has...

 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
Bona fide purchaser
A bona fide purchaser referred to more completely as a bona fide purchaser for value without notice is a term used in the law of real property and personal property to refer to an innocent party who purchases property without notice of any other party's claim to the title of that property...

); 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.

United States

In American law
Law of the United States
The law of the United States consists of many levels of codified and uncodified forms of law, of which the most important is the United States Constitution, the foundation of the federal government of the United States...

, a bona fide purchaser
Bona fide purchaser
A bona fide purchaser referred to more completely as a bona fide purchaser for value without notice is a term used in the law of real property and personal property to refer to an innocent party who purchases property without notice of any other party's claim to the title of that property...

 who unknowingly purchases and subsequently sells stolen goods will, at common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...

, be held liable in trover
Trover
Trover is a form of lawsuit in common-law countries for recovery of damages for wrongful taking of personal property. Trover belongs to a series of remedies for such wrongful taking, its distinctive feature being recovery only for the value of whatever was taken, not for the recovery of the...

 for the full market value of those goods as of the date of conversion
Conversion (law)
Conversion is a common law tort. A conversion is a voluntary act by one person inconsistent with the ownership rights of another. It is a tort of strict liability...

. Since the true owner retains legal title, this is true even in a chain of successive bona fide purchaser
Bona fide purchaser
A bona fide purchaser referred to more completely as a bona fide purchaser for value without notice is a term used in the law of real property and personal property to refer to an innocent party who purchases property without notice of any other party's claim to the title of that property...

s (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
Implied warranty
In common law jurisdictions, an implied warranty is a contract law term for certain assurances that are presumed to be made in the sale of products or real property, due to the circumstances of the sale. These assurances are characterized as warranties irrespective of whether the seller has...

 that the seller has title to the property (Article 2 of the Uniform Commercial Code
Uniform Commercial Code
The Uniform Commercial Code , first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.The goal of harmonizing state law is...

 (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
Nazism
Nazism, the common short form name of National Socialism was the ideology and practice of the Nazi Party and of Nazi Germany...

 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
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

 due to the nemo dat rule.

There are numerous exceptions to the nemo dat rule. Legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....

, 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
Negotiable instrument
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. According to the Section 13 of the Negotiable Instruments Act, 1881 in India, a negotiable instrument means a promissory note, bill of exchange or cheque payable either...

, such as cheque
Cheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...

s. 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. 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
Estoppel
Estoppel in its broadest sense is a legal term referring to a series of legal and equitable doctrines that preclude "a person from denying or asserting anything to the contrary of that which has, in contemplation of law, been established as the truth, either by the acts of judicial or legislative...

 (see also, s 21(1) of the Sale of Goods Act 1979
Sale of Goods Act 1979
The Sale of Goods Act 1979 is an Act of the Parliament of the United Kingdom which regulates English contract law and UK commercial law in respect of goods that are sold and bought. The Act consolidates the original Sale of Goods Act 1893 and subsequent legislation, which in turn had codified and...

 '...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
    Shogun Finance Ltd v Hudson
    Shogun Finance Ltd v Hudson [2003] is an English contract law decided in the House of Lords, on the subject of mistaken identity as a basis for rescission of a contract. The case has been the subject of much criticism in failing to effectively clarify the area of mistake to identity.-Facts:A rogue...

    [2003] UKHL 62

See also

  • English property law
    English property law
    English property law refers to the law of acquisition, sharing and protection of wealth in England and Wales. Property law can refer to many things, and covers many areas. Property in land is the domain of the law of real property. The law of personal property is particularly important for...

  • Corpus Juris Civilis
    Corpus Juris Civilis
    The Corpus Juris Civilis is the modern name for a collection of fundamental works in jurisprudence, issued from 529 to 534 by order of Justinian I, Eastern Roman Emperor...

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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