In Bishopgate Motor Finance Corporation Ltd v Transport Brakes Ltd [1949] 1 KB 322 Lord Denning stated that:

“In the development of our law, two principles have striven for mastery. The first is for the protection of property: no one can give a better title than he himself possesses. The second is for the protection of commercial transactions: the person who takes in good faith and for value without notice should get a good title. The first principle has held sway for a long time, but it has been modified by the common law itself and by statute so as to meet the needs of our own times.”

Critically evaluate the principles of transferring ownership in goods by a non-owner in light of this statement.

Answer

This is a general and quite wide question on the principles of nemo dat. You should start by stating the general principle which is that ‘no one can transfer what he has not got’. Therefore, a seller can only pass ownership of goods to a buyer if he owns or has the right to sell them at the time of sale. You should explain that the nemo dat rule might apply where a buyer purchases stolen property but also arises where a seller has no right to sell the goods but nevertheless sells them.

It is important to emphasise that in general terms the nemo dat rule protects the true owner of the goods and the innocent purchaser gets no title whatever. However, this statement is subject to a number of exceptions which are contained in the Sale of Goods Act 1979, the Factors Act 1889 and the Hire Purchase Act 1964. It is essential to explain that when any of these exceptions apply, the original owner of the goods loses his title in favour of the purchaser who would have lost out if the exception did not apply. These exceptions protect the innocent purchaser.

Having explained the general principle and pointing out that this is subject to a number of exceptions, you should then set out those exceptions and explain, by reference to case law, how they operate.