Lloyd's Maritime and Commercial Law Quarterly
MISTAKE OF IDENTITY: A COMPARATIVE ANALYSIS
Sean Thomas *
This article notes that English courts deal with voidable title conflicts by attempting to find whether there is a contract between the original owner of goods and the rogue whose actions made such contract void or voidable. This position has become entrenched following the decision of the House of Lords in
Shogun Finance v. Hudson. A comparative analysis with the law of the United States indicates a superior alternative: there is no need for a contract between the original owner and the rogue.
I. INTRODUCTION
In the sale of goods, the general rule is that “no one can transfer a better title than he himself possesses: nemo dat quod non habet
”.1
This general “nemo dat
rule” can lead to “nemo dat
conflicts” between someone claiming the benefit of the rule and another claiming protection under one of the exceptions to it.2
The following basic situation illustrates a nemo dat
conflict. First, an original owner of goods sells them to a middleman, who then sells them to an innocent purchaser. If the middleman has misrepresented his identity, the contract between him and the original owner may be void or voidable. If the contract is void, any title that would ordinarily pass under the contract is itself void, and the nemo dat
rule means that the innocent purchaser would only have a void title to the goods, which is of minimal value. However, if the contract was voidable, then the middleman can pass a voidable title to the innocent purchaser, who could then gain protection from the general nemo dat
rule by the “sale under voidable title” exception provided by the Sale of Goods Act 1979, s 23.3
The absence of the middleman (either because he is untraceable or is not worth suing) causes the nemo dat
conflict between the
* University of Manchester. This article is a development of a chapter from the author’s PhD thesis “A Comparative Analysis of the Rule of Nemo Dat Quod Non Habet
and its Exceptions in English and USA Law”. Versions of this article were presented at the International Graduate Legal Research Conference, at King’s College London, in April 2007, and at the Society of Legal Scholars Conference, at the University of Durham, in September 2007. I would like to thank my supervisor Andrew Bell for his usual insight, my partner Ruth Wadman for her non-lawyer’s eye, and for the many comments I have received. The usual disclaimer applies.
1. Whistler
v. Forster
(1863) 14 CB (NS) 248, 257; 143 ER 441, 445 (Willes J). This general rule is now embedded in the Sale of Goods Act 1979, s 21.
2. For a general overview of the exceptions to the general nemo dat
rule, see, eg, A G Guest et al
(eds), Benjamin’s Sale of Goods
, 7th edn (Sweet & Maxwell, 2006), ch 7.
3. “When the seller of goods has a voidable title to them, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller’s defect of title.”
188