Mistaken Identity

1
Mistaken Identity

• Contracts

2
Mistake (contd)

• Mistaken Identity
• The problem is not between the parties to the
  original transaction.
• As between them, it is generally clear that the
  original seller got played by the original buyer.
  The original seller in all of these cases in
  fact made the deal with the specific purchaser.
• The reason for the deal with the specific
  purchaser was that the seller is often, but not
  always accepting a personal cheque from the
  buyer, in which case, the creditworthiness of the
  buyer is a legitimate concern.

3
Mistake (contd)

• Cundy v. Lindsay
• 1878 English House of Lords
• Facts
• Blenkarn lives at 37 Wood Street, Cheapside. He
  applied have the firm of the defendant, Lindsay,
  make certain handkerchiefs for Blenkarn. There
  is a good firm of W. Blenkiron Sons, operating
  on the same street, and Lindsay thought that he
  was dealing with them. Blenkarn received the
  handkerchiefs from Lindsay and sold them to
  Cundy.
• This deal was done by correspondence.

4
Mistake (contd)

• Holdings
• If the contract is void ab initio for mistake,
  then there is no title passing, and therefore,
  the original seller wins
• If the contract is simply voidable for fraud,
  then, until rescinded, the contract was valid.
  Thus property passed, and the contract could have
  been rescinded, but was not. Therefore, the
  subsequent buyer wins.
• Here, the original seller wanted to contract with
  W. Blenkiron Sons, which he was not.
  Therefore, there is no contract.

5
Mistake (contd)

• Lewis v. Averay
• 1971 English Court of Appeal
• Facts
• Mr. Lewis owns a car. He wants to sell it. A
  man claiming to be actor Richard Green. He was
  asked to produce proof, which he ostensibly did.
  It turns out that the buyer is a rogue, whose
  cheque bounced. Before it did, the rogue
  purportedly sold the car to Averay, now acting as
  Mr. Lewis.

6
Mistake (contd)

• Lewis v. Averay (contd)
• Issue
• The question therefore, is whether when the rogue
  dealing with Mr. Lewis, Mr. Lewis delivered
  property in the car to the rogue, such that the
  rogue could validly sell the car to Mr. Averay.

7
Mistake (contd)

• Holdings
• The common law used to be that a mistake as to
  the identity of the contracting party
  automatically invalidates the contract
  (paragraph 13).
• However, we have already seen that the general
  rule of invalidity for a mistake in terms of the
  identity of the contract party is dependent on
  the non-mistaken party actually caring about the
  identity of the contracting party (Bell v. Lever
  Bros.)
• The distinction between identity of the
  contracting party and the attributes of that
  party is meaningless (paragraph 15)
• A contract should be voidable not void (paragraph
  16)

8
Mistake (contd)

• Shogun Finance v. Hudson
• 2004 English House of Lords
• The claimant finance company entered into a
  written agreement with a man whom it believed to
  be a certain Mr. Patel, providing him with
  hire-purchase finance for the purchase of a motor
  car from a dealer. The agreement contained an
  offer and acceptance clause which provided
• You the customer named overleaf are offering
  to make a legal agreement by signing this
  document. We the creditor can reject your
  offer, or accept it by signing it ourselves.

9
Mistake (contd)

• Shogun Finance v. Hudson (contd)
• If we sign this document it will become legally
  binding at once (even before we sent you a signed
  copy)...
• Before the finance company accepted the proposal
  it had checked Mr. Patels name and address
  against the electoral register, checked whether
  any county court judgments or bankruptcy orders
  were registered against him, checked his credit
  rating, and compared his signature with the
  signature on his driving licence.

10
Mistake (contd)

• Shogun Finance v. Hudson (contd)
• In fact, the man was a rogue who had dishonestly
  acquired the real Mr. Patels driving licence and
  forged his signature. The dealer handed the
  vehicle to the rogue who then sold it to the
  defendant, a private purchaser acting in good
  faith without notice of the hire-purchase
  agreement.

11
Mistake (contd)

• Shogun Finance v. Hudson (contd)
• Holdings
• The majority says that Lewis v. Averay does not
  apply to contracts concluded by correspondence.
• The identity of the parties is dealt with in the
  same way as a mistake as to the terms of the
  contract, but it is a matter of construction
• The dissent says Lewis v. Averay should apply in
  all situations of mistaken identity