Keenan and Riches’BUSINESS LAW

Chapter 7Introduction to the law of contract

Where the parties have face-to-face dealings, the

courts are likely to assume that the identity of the other

party is not material and that the mistaken party O

intends to contract with the person in front of him. In

this situation the contract will be valid until O realises

that he has been misled and avoids the contract for a

fraudulent misrepresentation.

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2 Mistake as to the identity of one of the parties.If one
party makes a mistake about the identity of the person
he is contracting with, this may invalidate the contract.
A typical ‘mistaken identity’ case is where a crook (C)
fraudulently represents to the owner of goods (O), that
he is someone else (X), and on this basis O hands over
his goods to C by way of a sale either on credit or in
return for a (worthless) cheque. C sells the goods to an
innocent buyer (B) and then disappears, pocketing the
proceeds of his deception. When the fraud is discovered,
O seeks to recover his goods from B by suing in the tort
of conversion. This typical scenario is set out in Fig 7.1.
The courts have tended to take different approaches
depending on whether the parties had face-to-face dealings
or agreement was reached by written correspondence.
Where the parties have not met and the agreement
has been concluded in writing, if the identity of the party
contracted with is material to the contract, a mistake as
to identity will result in the contract being void.

High Court of Australia awarded damages to McRae for

breach of contract. It was held that the contract con-

tained an implied promise by the Commission that there

was a tanker at the stated location.

Figure 7.1A typical mistaken identity case

Cundyv Lindsay(1878)

Lindsay & Co, Belfast linen manufacturers, received an

order for a large quantity of handkerchiefs from a rogue

called Blenkarn. The rogue had signed his name in such

a way that it looked like ‘Blenkiron & Co’, a well-known,

respectable firm. Lindsay & Co despatched the goods

on credit to Blenkarn who resold 250 dozen to Cundy.

Blenkarn did not pay for the goods and was later con-

victed of obtaining goods by false pretences. Lindsay &

Co sued Cundy for conversion. The House of Lords held

that the contract between Lindsay & Co and Blenkarn

was void for mistake. Lindsay & Co intended to deal with

Blenkiron & Co, not the rogue, Blenkarn. Cundy was

liable in conversion.

Phillipsv Brooks Ltd(1919)

A man entered the claimant’s shop to buy some jew-

ellery. He selected various items of jewellery and offered

to pay by cheque. While writing the cheque the man

said, ‘You see who I am, I am Sir George Bullough.’ He

gave an address in St James’s Square. The claimant

knew of a Sir George Bullough and, after checking in a

directory that Sir George had an address in St James’s

Square, he asked if the man would like to take the jew-

ellery with him. The man replied that the jeweller had

better let the cheque clear first but he would like to take

the ring as it was his wife’s birthday the following day.