Keenan and Riches’BUSINESS LAW

goods, ownership of the goods will pass to the buyer be-

cause the true owner will be prevented (estopped) from

denying that the seller had the right to sell.

Part 3Business transactions

312

Demby, Hamilton & Co Ltdv Barden

(1949)

The buyer neglected to take delivery of consignments of

apple juice which the seller had prepared and stored in

casks. As a result of the delay, the juice went off and had

to be thrown away. The seller sued for the price of the

goods sold and delivered. The buyer was liable. Under

s 20(2) the goods were at the buyer’s risk because he

was responsible for the delay.

The Sale and Supply of Goods to Consumers Regu-
lations 2002 amends s 20 of the Sale of Goods Act 1979
where the buyer deals as a consumer, to the effect that
the goods remain at the seller’s risk until delivered to
the consumer. This means that if the seller employs a
carrier to deliver the goods to the consumer, and the
goods are accidentally damaged in transit, the seller
bears the risk and not the consumer.

Sale by a person who is not

the owner

As a general rule, a buyer cannot acquire ownership
from someone who himself has neither ownership nor
the owner’s authority to sell. This rule, which is known
as thenemo datrule from the phrase nemo dat quod non
habet– no one can give what he has not got – is
embodied in s 21:

‘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...’
In these circumstances, the buyer will be required to
return the goods to their true owner. The buyer’s only
remedy is to sue the person who sold him the item for
breach of s 12. In most of these cases, however, the seller
is a rogue who disappears before the buyer can take
action against him. The unsuspecting buyer is left to
bear the full brunt of the rogue’s misdeeds. It is not sur-
prising, therefore, that exceptions to the nemo datrule
have developed. The exceptions are outlined below.

Estoppel (s 21)

If the true owner by his conduct allows the innocent
buyer to believe that the seller has the right to sell the

Eastern Distributors Ltdv Goldring

(1957)

Murphy was the owner of a van. He wanted to buy a car

from Coker, a dealer, but he could not raise enough

money for a deposit. Murphy and Coker then devised a

scheme to generate the necessary finance. Coker would

pretend that he owned the van: he would then sell the

van and the car to a finance company, which would let

both vehicles out on HP to Murphy. The proceeds of the

sale of the van would raise sufficient money to finance

the required HP deposits. Unfortunately, the finance

company accepted the proposal for the van but turned

the car down. Unknown to Murphy, Coker proceeded to

sell the van to the finance company. It was held that the

finance company had become the owner of the van,

because the original owner (Murphy) by his conduct had

allowed the buyer (the finance company) to believe that

the seller (Coker) had a right to sell the goods.

Section 21(1) applies where goods are ‘sold’ by a per-

son who is not their owner; it has no application to an

agreement to sell.

Shawv Commissioner of the Police of

the Metropolis(1987)

The claimant agreed to buy a Porsche from a rogue. The

rogue had obtained the car from its owner by saying that

he wanted to show it to a prospective buyer. The rogue

also acquired a document from the owner stating that he

had bought the car, but this was untrue. The rogue left

the car with the claimant and disappeared before being

paid. The claimant argued that he had acquired good title

under s 21(1) since the document signed by the owner

raised an estoppel against him. The Court of Appeal held

that the original owner was entitled to recover his car.

Section 21(1) did not apply where the buyer had only

agreed to buy.

Agency (s 21(2))

The law of agency applies to contracts for the sale of goods.

An agent who sells his principal’s goods in accordance

with the principal’s instructions passes a good title to the

buyer because he is selling the goods with the authority

and consent of the owner. The buyer may even acquire

a good title to the goods where the agent has exceeded