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Car & Universal Finance v Caldwell [1965]

Facts

  • A fraudster purchased the claimant’s car with a cheque which bounced
  • Immediately, the claimant notified the AA that the car had been purchase fraudulently, meaning that the claimant still had legal title to it
  • The fraudster then sold the car to a dealer and disappeared

Issue

  • Could Caldwell’s contract be rescinded and the car returned to her, given that the fraudster had no right to sell it, but the dealership had purchased it with no fraudulent intentions?

Decision

  • Yes

Reasoning

  • Although rescission is usually barred by intervening third party rights, Caldwell had made ‘Caldwell noises’ that the car was stolen. This was enough to rescind the contract, the dealer should have checked with the AA that the car was not stolen
  • Had ‘Caldwell noises’ been made after the dealership had purchased the car, rescission would have been barred
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