Walks you through the information you need to answer a problem question, including applying relevant cases, providing a balanced answer for higher marks etc
TIP: challenge everything in PQ if facts are unclear or not specific
case law on it – e.g., size of tag issue in Q3
Only address the exceptions referred to in the question
s.23 and s.25 often apply on the same facts
2. Sallie buys a television from Mark, a shopkeeper in Durham. She
wishes to pay with a cheque. Mark is uncertain about taking payment
by cheque but when Sallie tells him that she is the cousin of Baron
Rothschild (a wealthy philanthropist who is well known in the region)
Mark is reassured and sells her the television. However, before he
does so he asks her to sign up to his customer loyalty scheme. Sallie
agrees willingly and fills out the required form which asks for details
of her home address, telephone number and email address.
The following day Sallie’s cheque is dishonoured. Upon learning of
this Mark immediately informs the police and asks them to look out
for Sallie. Sallie meanwhile goes on to sell the television to Rita, an
accomplice, at a highly discounted price a few days later. Rita in turn
sells the television to Joe. A week later the police finally locate Sallie
at her home address.
Does Joe have a good title?
Sale under voidable title (since obtained by fraud):
= original owner sells goods to rogue (S), who acts fraudulently
rendering the K of sale voidable at the original owner’s option, and S
then sells the goods onto a third party
S.23: ‘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.’
Lewis v Averay – law presumes that the seller is contracting with the
person before them rather than who they are purporting to be – unless
written communication (Cundy v Lindsay), fraud only creates a
voidable title rather than a void one
Main legal authority (BUT heavily criticised, especially through
other case law): Shogun Finance Ltd v Hudson [2003]: (car
released to a rogue by virtue of hire purchase agreement, for which
11
, the rogue fraudulently gave a false name. Rogue sold the car to
innocent third party who bought in good faith. Innocent recipient
could only defeat the finance company’s claim to the car, if the rogue
had good enough title (i.e. voidable rather than void) at the time of
sale. House of Lords held that the rogue’s contract with the finance
company was void because of the fraud as to his identity and therefore
his title at the time of the sale to innocent recipient was void) [where
the transaction is made face-to-face the law presumes that the S
means to conduct business with the person currently before them –
any falsehood on the documents / correspondence (e.g., as to the
identity of the parties) renders the transaction void from the
beginning]
o Car and Universal Finance v Caldwell: the innocent party [i.e.,
the original owner of the goods who sold them to the rogue] must
do something to envince his intention to rescind the K with
rogue [e.g., contact the police]
RELEVANCE:
o Face-to-face deal – presume conduct with person in front but only
accept checks due to fraudulent claim of being cousin to
Rothschild
Whether Joes receives good title is dependent on whether the K was
rescinded by Mark before the sale to him – Did he rescind the
contract? YES: made contact with the police – this may be sufficient.
[APPLY Caldwell here]. NO: he did have the home address so could
have easily gone to Sallie’s house to rescind the K instead of going to
the police. Further, on the facts, he made no attempt to call her.
HOWEVER: reasonable to believe she was lying, and that the home
address would be fake, especially as it took the police a week to find
Sallie
o CONCLUSION: calling police most likely enough to envince
intention to rescind K so made void, and hence Joe does not have
good title
IMPORTANT FROM SCENARIO:
o Sallie only tells Mark about being a cousin – facts do not say she
lies
o Not clear that if she was a cousin whether she would come from
the same line money
CONCLUSION: Rita is not bona fide purchaser without notice for
value
Buyer in possession – s.25
With consent of the owner
In good faith without notice
3. Paul wishes to buy an Arco floor lamp from Mark. Mark agrees but
tells Paul that he would like to hire the lamp back from Paul for a few
months until he is able to get hold of another lamp to display in the
showroom. Paul agrees as he is in no hurry for the lamp. Mark
therefore continues to display the lamp in his showroom.
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