The relevant Latin phrase this week is “Nemo dat quod non habet”, which means “No-one can give what he does not have”.

In other words, the 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.

The cases that arise are when an innocent buyer (what we call a purchaser in good faith) purchases property and it turns out that it had been stolen. The true owner asks for it back. It also arises where a seller has no right to sell goods, but nevertheless sells them.

This rule effectively means that if a buyer purchases a possession from someone in the above circumstances it means that the purchaser does not acquire any ownership.

In the case of Jerome v Bentley in 1952 – Mr J entrusted a stranger, Major Trentham with a diamond ring to sell for £550. Twelve days later the major sold the ring for £175 to D, who bought in good faith thinking the major was the owner.

The court held that the major effectively became a thief of the ring and no property passed to D.

At first glance, this rule appears to make common sense. If someone steals your car and later sells it to a buyer who buys in good faith, and you discover that fact, then the buyer cannot claim ownership of the car against you. The car remains yours. The buyer’s remedy is against the person who sold it to him.

As always however, the law has had to adapt to the world of commerce and the rule has had to be modified by the courts and by Parliament to meet the needs of our times. Those exceptions to the rule have been largely set out in the Sale of Goods Act 1979 and in various pieces of hire purchase legislation.

An obvious exception to the rule would be if the owner acts in such a way that it appears that the seller has the right to sell. For example, in the case of Shaw v Commissioner of Police, the owner of a Porsche advertised it as ‘car for sale’. A swindler claimed to be interested in purchasing it on behalf of a client and the owner rather foolishly allowed the swindler to take delivery of the car and gave him a note saying that he had sold the car to him. This was untrue, as the owner had merely authorised the swindler to sell it on his behalf. The owner here was clearly at fault. A person who acquires goods on hire purchase and sells them before he pays the final instalment will pass no title to the buyer. Again, however, commercial pressures led to the Hire Purchase Act making an exception to this in the case of a sale of a motor vehicle that was acquired by hire purchase. This means that someone buying in good faith a motor vehicle from someone who has possession of the vehicle under a hire purchase agreement obtains good title to the vehicle.

If someone forges someone’s signature on the transfer of property, the buyer does not acquire good title to the property. However, if the buyer then mortgages the property, the building society’s mortgage would bind the original owner. That means the original owner can acquire the property back, but this time, it will be burdened by the mortgage.