UNIT 4

TRANSFER OF TITLE BY NON-OWNER

Under Nigerian commercial law, the general rule is encapsulated in the Latin maxim nemo dat quod non habet, which means "no one gives what they do not have." This principle is codified in Section 21 of the Sale of Goods Act 1893. However, there are exceptions where a non-owner can transfer a good title to a buyer.

1. Sale by a Mercantile Agent
   See section 21(1) of the Sale of Goods Act which states that where a mercantile agent is entrusted with the possession of goods or documents of title to goods, any sale made by him in the ordinary course of business transfers the same title to the buyer as if the agent were expressly authorized by the owner of the goods to make the sale. See the case of Folashade v. Duroshola (1961) 1 All NLR 87 where the court held that a mercantile agent in possession of goods can transfer a valid title to a buyer acting in good faith and without notice of any defect in the title of the goods.
2. Sale by One of Joint Owners
   See section 23 of the Sale of Goods Act which provides that if one of several joint owners of goods has the sole possession by permission of the co-owners, the property in the goods may be transferred by him to any person receiving the goods in good faith and without notice of the joint ownership.
3. Sale under Voidable Title
   See section 24 of the Sale of Goods Act which states that when the seller of goods has a voidable title, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided they are bought in good faith and without notice of the seller's defect in title.
4. Seller or Buyer in Possession After Sale
   Under Section 25(1) and (2) which states that if a seller remains in possession of the goods or documents of title after the sale, or a buyer obtains possession of the goods or documents before the property in them has passed, they can transfer a valid title to a third party who receives the goods in good faith and without notice of the original sale. See the case of Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd [1965] A.C. 867 where the court held that a seller in possession after a sale can transfer a valid title to an innocent third party.

SPECIAL EXEMPTION TO THE DOCTRINE OF NEMO DAT QUO NON HABEAT

Several statutory provisions and common law principles create exceptions to the doctrine of nemo dat quod non habet:

1. Estoppel: this is where a non-owner can transfer a valid title if the true owner, by their conduct, is estopped from denying the seller's authority to sell.
2. Sale under Voidable Title: this is where as discussed, Section 24 allows a buyer to obtain a good title if they purchase goods in good faith and without notice of the seller’s voidable title.
3. Sale by Mercantile Agent: See section 21(1) allows a mercantile agent to transfer a valid title under the conditions previously outlined.
4. Sale by Seller or Buyer in Possession: See section 25 allows a seller or buyer in possession of goods or documents of title to transfer a valid title to a third party who buys in good faith. See also the case Cundy v Lindsay (1878) 3 App Cas 459 where the court established that a buyer who purchases goods in good faith from a seller who has a voidable title acquires a good title, provided they are unaware of the defect.

FUNDAMENTAL TERMS

Fundamental terms are essential terms of a contract whose breach entitles the injured party to terminate the contract and claim damages. These terms go to the root of the contract. See section 11 of the Sale of Goods Act, which provides that a condition is a fundamental term, while a warranty is a less critical term and that the breach of a fundamental term allows the non-breaching party to repudiate the contract and seek damages. See the case of Poussard v Spiers and Pond (1876) 1 QBD 410 where the court held that a breach of a fundamental term (condition) entitles the non-breaching party to terminate the contract.

FUNDAMENTAL BREACH

A fundamental breach occurs when a party fails to perform a primary obligation under the contract, leading to a significant failure of consideration for the other party. This allows the injured party to terminate the contract and seek damages for losses suffered due to the breach. See the case of Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 where the court held that a fundamental breach allows the injured party to terminate the contract and seek damages, irrespective of any exclusion clauses.

EXEMPTION CLAUSES

Exemption clauses are terms in a contract that exclude or limit the liability of one party for breach of contract, misrepresentation, or negligence. These can be in exclusion clauses which completely exclude liability for certain breaches or limitation clauses which limit the extent of liability for certain breaches. For an exemption clause to be effective, it must be incorporated into the contract. This can be done through signature, notice, or previous dealings. However, the courts interpret exemption clauses strictly, often applying the contra proferentem rule, which construes any ambiguity against the party seeking to rely on the clause. See the case of Olley v Marlborough Court Ltd [1949] 1 KB 532 where the court held that an exemption clause must be brought to the attention of the other party at the time of contract formation to be effective and in Nigeria, the regulation of exemption clauses is also influenced by statutory provisions such as the Nigerian Consumer Protection Council Act and the general principles of contract law.

CONCLUSION

Understanding the rules and exceptions regarding the transfer of title by non-owners, the doctrine of nemo dat quod non habet, fundamental terms, fundamental breaches, and exemption clauses is crucial for navigating commercial transactions in Nigeria. These principles ensure that parties are aware of their rights and obligations, the conditions under which title can be transferred, and the limits of liability within commercial agreements.