Dealers knowledge but that caldwell had done

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 [1965]
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 [1972] 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 [1965] 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 [2001] 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.
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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).