dealer’s knowledge, but that Caldwell had done sufficient to avoid the contract by inform- ing the police before the sale to the dealer. The value of this decision has been restricted by Newtons of Wembley Ltd v Williams  1 QB 560 (Sealy and Hooley, pp.362–63. Two of the judges who sat in Caldwell also heard this appeal), where it was held that, even if the owner avoided the contract before the resale, title passed because the rogue was a buyer in possession and the sale was made in the ordinary course of business of a mercantile agent, that is, at a market for used cars (see s.25(1); section 4.7.5 below). 4.7.4 Seller in possession Essential reading Sealy and Hooley, Chapter 9: ‘Transfer of title’, pp.355–59. This is where A, the seller, having sold the goods to B, then sells the same goods to C. If property has passed to B, but the seller is still in possession of the goods or documents of title to the goods, and the seller sells them to C, who purchases in good faith and without no- tice of the sale to B, this second transaction passes title to C. B has only an action for breach of contract against the seller (s.24. Section 8 of the Factors Act 1889 is almost identical). Possession includes where goods are not in the physical possession of the seller, but are under their control: for example, goods held by a warehouse owner to the order of the seller. The seller’s possession does not have to be in any particular capacity or even lawful: ‘It is sufficient if he remains continuously in possession of the goods that he has sold to the purchaser’ ( Worcester Works Finance Ltd v Cooden Engineering Co Ltd  1 QB 210, Lord Denning MR). Lord Denning thought the section might not apply where the seller’s possession had not been continuous (also, Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd  AC 867; Sealy and Hooley, pp.356–58. But Bridge (1998), pp.457–59). For the second buyer to acquire good title, the seller must deliver possession of the goods or documents of title: merely contracting a second sale is not sufficient to give title to the second buyer. In Michael Gerson (Leasing) Ltd v Wilkinson  QB 514, machinery was sold to a finance company and leased back to the seller, who then sold it to a second finance company and leased back; at all times the machinery remained in the possession of the seller, but it was held that the seller’s acknowledgement to the finance company that the machines were being held on its behalf amounted to a delivery. ¢
Commercial law 4 Sale of goods: contract, property and risk page µµ By ‘documents of title’ is meant those documents ‘used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by indorsement or delivery, the possessor of the document to transfer or receive goods’ (s.61(1), see also Factors Act 1889, s.1(4). See Sealy and Hooley, pp.358–59). Note SGA gives the seller the right to resell goods and pass property to the new buyer where the seller retained possession and the price has not been paid by the original buyer (see 6.2).
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