Examination of Nemo Dat Quod Non Habet Rule and Caveat Venditor in Contract Law

Protection of property and commercial transactions

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"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." (Denning L.J. in Bishopsgate Motor Finance Corp v Transport Brakes [1949] 1 KB 322, 336 – 337.)

Examine the above dictum with the aid of at least one exception to the nemo dat quod non habet rule.

Critically assess the extent to which caveat venditor ("let the seller beware") has effectively replaced the old rule of caveat emptor ("let the buyer beware") in relation to implied terms about the quality and fitness for any particular purpose of goods supplied under a contract of sale governed by the Sale of Goods Act 1979 as amended.

The statutory reforms to the law on sale of goods forming part of a specified bulk have resulted in the buyer acquiring property in the goods. Viewed from the perspective of theseller, the reform has introduced uncertainty into a contractual landscape where certaintyprevailed previously. But so far as the buyer is concerned, the changes introduced are merelycosmetic, providing little solution to a problem that called for no less than a radical attention from the legislature.

• Discuss

Sophia works with the Nursing, Midwifery and Care Department of NHS. She has two children aged 9 and 12, and owns a Peugeot 407 saloon car for commuting, school runs and a range of social activities. As of March 2021, the Peugeot car was 19 years old and in bad condition, though it managed to pass the last MOT test. Sophia recently received a pay rise and decided the time has arrived to replace the Peugeot car with a newer vehicle to make her life easierand more enjoyable for her and the family. She visited CarGuru website and saw Matthew’s advert, offering for sale a Hyundai Tucson priced at £2,700. On Friday, 12 March 2021, Sophia contacted Matthew by means of an SMS text message via WhatsApp. The followingconversation then ensued between them:

At least one exception to the Nemo Dat Quod Non Habet rule

Sophia: “I’m interested in the car. May I know why you’re selling the car?”

Matthew: “I have 1 other car that I use more frequently than the Tucson for work.”

Sophia: “Oic. Is there any warning light or problem with the car?”

Matthew: “Only the front brake disc light on and off. I can get it easily sorted at a garage for £70.”

Sophia: “I’m based in Leicester. Any chance to drive the car to me after you’ve repaired the brake disc? Let me have your bank details for transfer of £70 to meet the cost of required repair. After a trial run in Leicester and I don’t buy the car, no refund. If I like the car, I willdeduct the £70 from the advert price of the car and transfer the balance £2,630 to u. Is this okby u?”

Matthew: “Absolutely! u will be happy with the car. My sort code and a/c numbers: 09-07-05 and 12388909.” Sophia also informed him about her routine commitments and as to why she wanted to drop her Peugeot car.

In the morning of 14 March 2021, Sophia went back to the CarGuru website and found that the Hyundai Tucson vehicle has been flagged up as a “Category N car”. Almost immediately, she frantically inquired from Matthew about the status of that information. Matthew replied: “Insurance classed the car cat N due to a minor accident. I’m confident u will love the car.” On 16 March 2021, Matthew delivered the car to Sophia. Eight weeks later, a variety of mechanical and electrical issues surfaced in the car and the engine stalled. Sophia towed the  car to a couple of garages for necessary attention. But the efforts were unsuccessful: the car is uneconomical to repair. She then discovered that the car had been clocked, the actual mileage being 155,200 instead of the 82,320 originally displayed in the mileometer at the dashboardwhen she purchased the car in March.

• Advise Sophia.

(a). Jackson agreed to buy from Steve 300 tonnes of salmon fish at £120 per tonne. Steve disclosed that he was selling on behalf of Jonathan, but omitted to clarify he was authorised to sell for £140 per tonne. At the time when delivery should have been made, the market price of salmon fish was £150 per tonne. It is now £175 per tonne, owing to a devastating industrial action by Salmon Farmers’ Union. Jonathan sacked Steve upon knowledge of the transaction between Steve and Jackson, and sought to take advantage of the new market price by requesting Jackson to pay the current £175 per tonne if Jackson wanted to receive delivery of the salmon fish.

Assessment of Caveat Venditor replacing Caveat Emptor

(b). Martin agreed to sell to Steve 100 tonnes of Thai rice for £10,000. Steve did not disclose that he was buying for Santayana, because he knew that Martin would not sell to Santayana: Martin and Santayana had quarrelled, and in any event Martin owes Santayana £5,000. Two days after the sale and purchase agreement was concluded with Steve, Martin discovered that Santayana was in fact the buyer and therefore decided to withhold supply of the Thai rice, alleging fraud against Steve and Santayana.

Could Martin refuse to perform the contract of sale? Justify your answer with applicable case law principles and any other source material you have studied.

(c). Janice recently passed her driving test on her fourth attempt and wished to buy a second-handcar. She asked her office colleague and close friend (Jessica) to help her find a suitable second-hand car to buy. Jessica has much greater knowledge of motor cars than Janice. At the age of 9, a vehicle in which Janice was a passenger had a head-on collision with a delivery van driven by an inebriated 32-year-old raw recruit. The traumatising experience of the tragedyhas haunted Janice ever since. For this reason, Janice expressed to Jessica a preference for a car that had notbeen involved in an accident. Jessica agreed to provide the requested assistance without hesitation and free of charge. Soon afterwards, Jessica found a second-hand Toyota Avensis at the garage of Andrew, a motor mechanic of 16 years’ standing. Jessica inspected the car and noticed that its offside front door panel and bonnet were crumpled but straightened and sprayed in a manner impossible for a neophyte like Janice to detect. Jessica and Andrew have been friends for nearly a decade. She told Janice that the Avensis met Janice’s requirements and recommended it unreservedly. However, Janice then purchased the car for £2,300. Seven weeks later, it turned out that the car had been involved in a fatal crash on M1 motorway, that Andrew himself carried out the repairs after the disaster and bought it off the insurer as salvage for.

While the car was in motion on the M1 motorway just after Junction 25, the front door panel became detached from the main structure and fell to the ground, causing Morris, the driver of the vehicle behind Janice’s car, to veer off the road into a ditch. Morris obtained from Janice £750 in settlement for the pain and distress he suffered and to mend the damage to his vehicle.

Advise Janice on the likelihood of her succeeding in a claim against Jessica and Andrew.