Car & Universal Finance Ltd v Caldwell [1965]

Court: Court of Appeal

Facts: The claimant, owner of a Jaguar, was induced by fraud to sell the car to a rogue buyer who then absconded and could not be traced. After the cheque from the fraudulent buyer was rejected, the claimant promptly notified the police and sought their assistance in recovering the car. The rogue buyer subsequently sold the car to an intermediary, and it was passed through several sales before reaching the defendant, Car & Universal Finance Ltd (D), a bona fide purchaser without notice of the fraud.

Issue: Whether valid rescission of the contract could occur before the car was sold to a bona fide third-party purchaser, and whether the police report constituted sufficient notice of rescission.

Held: The Court of Appeal held that there was valid rescission of the contract before the sale to Car & Universal Finance Ltd. The police report was deemed sufficient notice of rescission, preventing D from acquiring title to the car.

Key Judicial Statements - Seller LJ: The general rule requires that a party entitled to rescind a contract must inform the opposing party of the rescission for it to be effective. However, an exception is recognized when communication is impossible, such as in cases where the other party is a fraudulent rogue who has absconded.