with goods on credit. The issue before the courts is whether the case is
genuinely one of identity or creditworthiness. The cases fall into two groups:
- Inter absentes – where the parties are not in each other’s presence, but
deal ‘at arm’s length’. - Inter praesentes – where the parties meet face to face.
The following case is an example of inter absentes, where the parties
communicated by post.
The following sequence of inter praesentes cases have been the subject of
some debate.
192 Contract law
Cundy v Lindsay (1878)
Cundy supplied a quantity of handkerchiefs to another firm called
Blenkarn, operating from Wood Street. Cundy was under the mistaken
impression that he was dealing with a reputable firm called Blenkiron,
who also operated from Wood Street. In fact a person had fraudulently
posed as this firm to mislead Cundy, even in the way in which he
produced stationery and signed his name. The goods were supplied and
sold on to Lindsay, an innocent third party. Cundy was found to have
been fundamentally mistaken in dealing with a rogue posing as
someone else, so the House of Lords held that the contract between
Cundy and Blenkarn was void for mistake. The consequence was that
the contract between Blenkarn and Lindsay was also void, obliging
Lindsay to return the goods.Phillips v Brooks (1919)
A rogue posed as Sir George Bullough, giving a reputable address, in
order to obtain various valuable items of jewellery. When presented
with a cheque the seller, Phillips, was at first dubious, but checked the
details given by the buyer, and then allowed him to take away a ring.
The cheque was dishonoured but by the time Phillips discovered this
the jewellery had been sold for cash to Brooks, an innocent third party,
and the rogue had disappeared. The court held that the mistake was not
crucial enough to avoid the contract, since it was not really one of
identity, but creditworthiness. The seller was taken to have contracted
with the person before him, whoever that may be, and Brooks was
therefore allowed to keep the ring.
Apart from the mistake issues, there was a fraudulent
misrepresentation in presenting the cheque, but rescission was barred
as a third party had now bought the goods.