Introduction
In English contract law, a unilateral mistake as to the identity of a contracting party can render a contract void from the outset. This is distinct from a contract induced by fraudulent misrepresentation, which is merely voidable. The consequence of this distinction is critical when an innocent third party has acquired goods from a rogue. If the original contract is void, the rogue never obtains title, and the original owner can recover the goods from the third party. If it is voidable, the rogue obtains a title which is valid until the contract is rescinded, allowing them to pass good title to a bona fide purchaser for value without notice. This essay will discuss how the courts have attempted to distinguish between a mistake of identity and a mistake of attribute, before considering whether this distinction serves a practical purpose or is simply a "legal fiction." It will be argued that while the distinction is difficult to apply and often seems illogical, it has been maintained by the courts as a blunt tool for allocating loss between two innocent parties.
The Distinction Between Identity and Attribute
The courts have developed different presumptions depending on whether the parties were dealing face-to-face (inter praesentes) or at a distance (inter absentes).
In contracts made at a distance, it has been easier for the mistaken party to argue that the contract is void. The leading case is Cundy v Lindsay (1878), where a rogue named Blenkarn ordered goods from Lindsay. He imitated the name of a reputable firm, Blenkiron & Co. The House of Lords held that Lindsay intended to deal only with Blenkiron & Co, not the rogue Blenkarn. As they had never intended to deal with Blenkarn, there was no consensus ad idem (meeting of minds), and the contract was void for mistake. The identity of the other party was of fundamental importance.
By contrast, in face-to-face dealings, there is a strong presumption that the mistaken party intends to contract with the person physically present before them. In such cases, the mistake is usually deemed to be one of attribute (such as creditworthiness), not identity. In Phillips v Brooks Ltd (1919), a rogue purchased a ring from a jeweller by pretending to be Sir George Bullough. The court held that the jeweller intended to contract with the person in the shop. The contract was therefore voidable for misrepresentation, not void for mistake. Similarly, in Lewis v Averay (1972), a rogue posing as the famous actor Richard Greene bought a car with a worthless cheque. The Court of Appeal, following Phillips v Brooks, held that Mr Lewis intended to deal with the person in front of him, and the contract was voidable. Lord Denning MR argued that any mistake was to the man’s attributes (that he was a creditworthy celebrity) rather than his essential identity.
A Legal Fiction or a Practical Tool?
The distinction has been subject to considerable judicial and academic criticism, with many arguing it is an unprincipled "legal fiction". Lord Denning in Lewis v Averay (1972) commented on the "slender distinction" and suggested it would be better if all such contracts were treated as voidable. The dissenting judges in the leading modern case, Shogun Finance Ltd v Hudson (2003), agreed. Lord Nicholls argued that "identity and attributes are intertwined" and that the separation is artificial. The very reason a specific identity is important is because of the attributes associated with it, such as wealth or trustworthiness. The different outcomes based on whether the deal was face-to-face or at a distance appear arbitrary and lack a coherent policy justification. In both scenarios, a seller is deceived, and an innocent third party purchases the goods in good faith.
However, the majority in Shogun Finance Ltd v Hudson upheld the traditional distinction. In that case, a rogue used a stolen driving licence to apply for hire-purchase finance to buy a car. The finance company dealt with the rogue via the car dealer and never met him. The House of Lords held, by a 3-2 majority, that because the contract was made at a distance, the finance company intended to deal only with the real Mr Patel whose details were on the form. Following Cundy v Lindsay, the contract was void for mistake, and the innocent purchaser (Mr Hudson) had to return the car to the finance company.
The survival of the distinction can be seen as serving a practical, if imperfect, commercial purpose. It provides a default rule for allocating loss. In face-to-face transactions, the law places the risk on the original seller, who is considered to be in the best position to assess the person they are dealing with and take appropriate precautions (Poole, 2021). This arguably protects the security of commercial transactions for innocent third-party buyers, who can rely on the apparent ownership of the seller. In distance contracts, where verification is harder, the rule protects the original owner. While the logic is questionable, the rule provides a degree of predictability for commercial parties.
Conclusion
In conclusion, the English courts distinguish mistake of identity from mistake of attribute primarily through presumptions based on the mode of contracting. In face-to-face dealings, the presumption is that the contract is with the person present, making the mistake one of attribute and the contract voidable. In distance contracts, it is easier to prove an intention to deal with a specific, identifiable party, making the contract void for mistake of identity. This distinction is widely seen as a "legal fiction" because a person's identity is often inseparable from their attributes. The powerful dissents in Shogun Finance demonstrate the logical frailties of the rule. Nevertheless, the distinction persists because it functions as a mechanism, however flawed, for allocating risk between two innocent victims of fraud. It gives a degree of certainty to commercial dealings, even if the justice of the outcome in individual cases can be debated.
References
Cundy v Lindsay (1878) 3 App Cas 459
Lewis v Averay [1972] 1 QB 198
Phillips v Brooks Ltd [1919] 2 KB 243
Poole, J. (2021) Textbook on Contract Law. 15th edn. Oxford University Press.
Shogun Finance Ltd v Hudson [2003] UKHL 62
