Court case(1882) 7 App Cas 573

Falk sold a cargo of salt to a buyer who resold part of it to sub-purchasers and gave them delivery orders, but did not transfer the bill of lading. The buyer became insolvent while the ship lay at the port of discharge and part of the cargo had been delivered under the delivery orders. Falk gave notice of stoppage to the shipowners for the remainder; Kemp, the buyer's trustee in bankruptcy, claimed it.

The House of Lords upheld the stoppage. A sub-sale by the buyer does not defeat the unpaid seller's right unless a document of title has been transferred to a purchaser taking in good faith and for value; a mere delivery order given by the buyer is not such a transfer. Delivery of part of the goods does not end the transit of the remainder unless it is made under circumstances showing an agreement to give up possession of the whole. Lord Blackburn explained that notice must reach the person in possession, or his principal in time to communicate it, and that the seller must on stoppage satisfy the carrier's lien for freight.