Nemo dat quod non habet, literally meaning "no one gives what they don't have" is a legal rule, sometimes called the nemo dat rule, that states that the purchase of a possession from someone who has no ownership right to it also denies the purchaser any ownership title. It is equivalent to the civil Nemo plus iuris ad alium transferre potest quam ipse habet rule, which means "one cannot transfer to another more rights than they have". The rule usually stays valid even if the purchaser does not know that the seller has no right to claim ownership of the object of the transaction ; however, in many cases, more than one innocent party is involved, making judgment difficult for courts and leading to numerous exceptions to the general rule that aim to give a degree of protection to bona fide purchasers and original owners. The possession of the good of title will be with the original owner.
In American law, a bona fide purchaser who unknowingly purchases and subsequently sells stolen goods will, at common law, be held liable in trover for the full market value of those goods as of the date of conversion. Since the true owner retains legal title, the seller is liable even in a chain of successive bona fide purchasers. However, the problem of successive bona fide purchasers can be remedied: If the jurisdiction recognises an implied warranty that the seller has title to the property, then the bona fide purchaser can sue the seller for breach of that implied warranty. Courts of equity traditionally also recognise various other exceptions, likely giving rise to the idea embodied in the modern UCC. This rule is exemplified in circumstances like the Holocaust reconciliation movement, where property, such as works of art, stolen or confiscated by the Nazis was returned to the families of the original owners. Anyone who purchased the art or thought they had ownership was denied any rights over the litigious property due to the nemo dat rule. As mentioned earlier, the nemo dat rule has numerous exceptions. Legal tender, for example, does not adhere to the rule in certain circumstances. For example, if a rogue buys goods from a bona fide merchant, then that merchant will not have to return the bills to the true owner because holding the rule to be otherwise would disrupt the economy and prevent the free flow of goods. The same may be true of other "negotiable" instruments like cheques. If Alice, a thief, steals a cheque from Bob and sells it to innocent Charlie, then Charlie is entitled to deal with the cheque, and Bob cannot claim it back from Charlie. Another matter is the transfer of other legal rights normally granted by ownership. In 2011, a US District judge ruled that a woman who had purchased a stolen laptop could sue a device tracking company for invasion of privacy stemming from recording software installed on the laptop to facilitate its recovery after being stolen. This ruling demonstrated that bona fide purchasers are entitled to some rights by virtue of possession alone, or that nemo dat is superseded by the bona fide purchaser's right to privacy.
Recording statutes
When dealing with real property, most American jurisdictions have codified recording statutes that will enable subsequent purchasers to divest title from the party with common law title if they qualify for protection under the recording statute. Three varieties of recording statutes exist: 1) Race statutes, 2) Notice statutes, and 3) Race-Notice statutes. A race statute will divest common law title from a person with superior title if the subsequent purchaser recorded their deed prior to the person with superior title. A notice statute will divest common law title from a person with superior title if the subsequent purchaser had no notice of the true owner's title. A race-notice statute requires a subsequent purchaser to be bona fide and record first.
English law
The original owner can obtain protection against the former owner through the doctrine of estoppel. Methods of the estoppel can be by words, by conduct, or by negligence. Estoppel by words, or representation by the original owner through words that he is the true owner or has the owner's authority to sell:
Henderson & Co v Williams 1 QB 521
Shaw v Commissioner of Metropolitan Police 1 WLR 1332, following Henderson
Central Newbury Car Auctions Ltd v Unity Finance Ltd 1 QB 371
Mistake about identity:
Shogun Finance Ltd v Hudson UKHL 62
Exceptions
Sales in open markets
In the eighteenth century at the time of William Blackstone, sales in an open market were an exception to the nemo dat principle. However, after the growth in the UK of car boot sales led to opportunities for rogues to "fence" stolen property, the Sale of Goods Act 1994 abolished the "market overt" exception to the nemo dat rule in 1995.
Leases
In the case of Bruton v London Quadrant Housing Trust 1 AC 406, Lord Hoffman created an exception to the rule in relation to the granting of a leasehold estate in land. It is possible, though this is controversial, for a mere licencee to create a tenancy if the hallmarks of a tenancy are present. This means that the holder of a lesser right can create a larger right, an estate even.
Scots law
As in the United States, banknotes in Scotland are an exception to the rule. This issue arose in the 1749 case of Crawfurd v The Royal Bank, where title to a banknote issued by the Bank of Scotland that had gone missing in the post was disputed.
