untitled

Mistake 129

In the following case the House of Lords thoroughly reviewed the cases on mistake as to
the person.

knowledge of the person with whom they thought they were dealing.) They were mistaken

only about the attributes of that person. They thought that they were dealing with someone

who was creditworthy and respectable, whereas in fact they were not.

Comment(i) The contract was voidable for fraudulent misrepresentation but the

claimants were defeated by s. 23 of the Sale of Goods Act 1979. (ii) The rogue could have

been sued for damages for the tort of deceit. However, this rogue (like most other rogues)

would not have had enough money to pay any damages.

Shogun Finance Ltd vHudson (FC) (2003) (House of Lords)

The defendant, Hudson, bought a car from a rogue. The rogue had taken the car on hire-

purchase from Shogun Finance Ltd, the claimants. If this contract between the rogue and

the claimants was a good contract then the defendant would become owner of the car

under s. 27 of the Hire-Purchase Act 1964. (This is a technical provision with which we need

not be concerned here. Its effect is examined in Chapter 7 at p. 217.) If the contract was

void then the defendant could not gain a good title. The question for the House of Lords

was therefore whether the contract between the rogue and the claimants was void for

mistake. The rogue had not met the claimants face to face but had visited a dealer who

was not the claimants’ agent. At the dealer’s showroom the rogue had produced a driving

licence stolen from one Durlabh Patel and had filled in one of the claimants’ standard

hire-purchase forms in Durlabh Patel’s name. A copy of this agreement had been faxed to

the claimants who had approved the sale.

Held(3 to 2) The contract between the rogue and the claimants was void for mistake and

so the defendant never became owner of the car.

Comment(i) The judges in the majority thought it significant that the contract was a

written contract which would not have come into existence until a credit check had been

carried out. They indicated that the position might have been different if it had been an oral

sale of goods because ownership of the goods could then have already passed to the

rogue before the time for payment and identification arose. (The time at which ownership

of goods passes to a buyer is considered in Chapter 7.) (ii) All five of the judges thought

that LewisvAveraywas correctly decided. (iii) The two judges in the minority thought that

CundyvLindsayshould be overruled and that a voidable contract existed between the

rogue and the claimants.

The final requirement for a contract to be void on account of a unilateral mistake as to the
person is that the mistake must have been a material mistake, that is to say it must have
been a mistake which induced the making of the contract. For example, in Mackiev
European Assurance Society (1869)the claimant asked a friend to insure him. The claimant
thought that the policy would be taken out with one particular insurance company but in
fact it was taken out with another. When the claimant claimed on his insurance policy the