Unilateral Mistake

Question 1

Unilateral Mistake - Topics

Answer 1

• Issue
• Law
• Phillips v. Brooks [1919]
• Ingram v. Little [1960]
• Lewis v. Avery [1972]

Question 2

Issue

Answer 2

• Possible unilateral mistake as to the identity of the person he was contracting with
• Issue: Is the contract with the rogue void or voidable, and thus, is the subsequent sale to a bona fide purchaser of the goods for value without notice valid?

Question 3

Law

Answer 3

• S 21 of the Sale of Goods Act: If the contract with the rogue was void ab initio, he never acquired ownership, and could not pass valid title to the third party.
• S 23 of the Sale of Goods Act: if a person with a voidable title sells goods to a buyer who purchases them in good faith and without notice, the buyer acquires good title if the original owner had not voided the contract before the sale to the third party
• Principle established in Phillips v. Brooks [1919] and confirmed in Lewis v. Avery [1972]: In face-to-face dealings, the presumption is that the offeror intends to contract with the person present before them. A mistake about a name, or creditworthiness is a mistake regarding attributes, not fundamental identity and doesn’t render the contract void for mistake, but merely voidable for fraudulent misrepresentation.

Question 4

Phillips v. Brooks [1919]

Answer 4

• A jeweller sold a ring to a rogue claiming to be a famous person. Upon verifying the address, the jeweller accepted a fraudulent cheque and the rogue pawned the ring.
• The court held the jeweller had intended to contract with the person who came into his shop. His mistake was only about that person’s creditworthiness (attribute).
• Therefore, the contract was voidable for fraud, not void for mistake. The rogue obtained a voidable title, and the pawnbroker acquired good title to the ring

Question 5

Ingram v. Little [1960]

Answer 5

• Three elderly ladies sold their car to a rogue. Upon verifying the name and address, they accepted a cheque, which later bounced and the car was sold to a third party.
• The Court held the contract void for mistake, allowing the ladies to recover the car.

Question 6

Lewis v. Avery [1972]

Answer 6

• A post-graduate student sold his car to a rogue who pretended to be an actor, using a forged ID. The student accepted a fraudulent cheque and let the rogue take the car, which was then sold to an innocent third party.
• Lord Denning stated that when dealing with a person present, the presumption is that a contract is made with that person, even if they are using a false name or identity.
• Such a contract is merely voidable for fraud, not void for mistake, and passes title unless and until it is avoided before third parties acquire rights.