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The Sale of Goods Act 1893 was enacted by the Parliament of the United Kingdom of Great Britain and Ireland to regulate contracts in which goods are sold and bought. The Act has been consolidated by the Sale of Goods Act 1979, which was enacted by the same Parliament. Suffice to say that since 1979, there have only been a number of minor statutory amendments and additions to the 1979 Act, one of which is the abolition of the subject of this article – the provision relating to the sale of goods in market overt.
The Sale of Goods Laws of Nigeria
The English Sale of Goods Act 1893 was received into the Nigerian Legal System as an Act of General Application. Subsequently, majority of the states in Nigeria adopted the Act as their Sale of Goods Laws. It is pertinent to note at this stage that notwithstanding the abolition of the market overt principle in England as above mentioned, the provision of law in this regard still stands in Nigeria. For the purpose of this article, our reference point shall be the Lagos State Sale of Goods Law.
The NemoDatRule and its Exceptions
The nemodat rule is given statutory effect in Section 22 of the Lagos State Sale of Goods Law, which provides as follows:
“Subject to the provisions of this Law, where goods are sold by a person whois not the owner thereof and who does not sell them under the authority or with the consent of the owner the buyer acquires no better title to the goods than the seller had…”
However, in order to maintain the balance between the rights of the original owner and the innocent purchaser, the Lagos State Sale of Goods Law stipulates various exceptions to the nemodat rule, some of which are sale in a market overt (Section 23), sale under a voidable title (Section 24) and sale by seller or buyer in possession (Section 26). An innocent purchaser, faced with a claim for a return of the goods from the original owner, can establish a defence that one of these exceptions applies to his situation, enabling him to keep the goods.
Alternatively, the purchaser could commence a suit against the seller in an attempt to recover his money, on the basis that the seller lacked title to the goods. He could argue that there has been a breach of the implied contract term with regard to title under Section 13 of the Lagos State Sale of Goods Law. Section 13(1)(a) of the Lagos State Sale of Goods Law provides that in a contract of sale, there is an implied condition on the part of the seller that in the case of the sale, he has a right to sell the goods, and in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.
However, often under such circumstances, the person from whom the purchaser bought the goods would have disappeared. This would then make impossible or meaningless a contract law-based claim. There would then be a contest between the original owner and the innocent purchaser as to who has title to the goods, and it is in this context that the exceptions to the nemodat rule become significant.
The Market Overt Exception
Section 23 of the Sale of Goods Law of Lagos State provides as follows:
“Where goods are sold in market overt, according to the usage of the market the buyer acquires a good title to the goods provided he buys them in good faith and without notice of any defect or want of title on the part of the seller”
A notable term in the above provision is “market overt”, which the Black’s Law Dictionary (7th Edition of 1999) defines as follows:
“an open, legally regulated public market where buyers, with some exceptions, acquire good title to products regardless of any defects in the seller’s title”.
Another definition is contained in Section 24 of the Sale of Goods Ordinance of Hong Kong. It provides that:
“A market overt is an open shop or market, where goods are openly sold in the ordinary course of business of such shop or market”
Pursuant to Section 23 of the Lagos State Sale of Goods Law,where goods are openly sold in a legally regulated public market in Lagos State, in the ordinary course of business of such shop or market, the buyer acquires a good title to the goods; provided he buys them in good faith and is unaware of any defect or want of title on the part of the seller. It is my opinion that the purpose of the market overt exception is to protect commercial transactions and promote the integrity of the market.
…to be continued
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