[1960] 3 All ER 332
Court of Appeal
Three elderly ladies advertised their car for sale. A fraudster, who called himself Hutchinson, agreed to buy their car for £717. When he offered to pay by cheque the ladies refused to go ahead with the sale. In order to persuade them that he was a reputable person he gave his name as a Mr P G M Hutchinson; he said he lived at Stanstead House, Stanstead Road, Caterham. In order to verify his statements one of the sisters went to the local post office which was two minutes from her house and checked his name and address in the local telephone directory. Having confirmed that a Mr P G M Hutchinson did live at the address given by the fraudster the sisters decided to accept the cheque. The cheque was dishonoured. In the meantime the fraudster had sold the car to the innocent third party Little.
The issue before the Court of Appeal was whether the contract between the three ladies and the fraudster was void for mistake in which case there being no contract no property in the car would have passed to the fraudster.
Pearce LJ
... The question here is whether there was any contract, whether offer and acceptance met...
The real problem in the present case is whether the plaintiffs were in fact intending to deal with the person physically present who had fraudulently endowed himself with the attributes of some other identity or whether they were intending only to deal with that other identity. If the former, there was a valid but voidable contract and the property passed. If the latter, there was no contract and the property did not pass...
An apparent contract made orally inter praesentes raises particular difficulties. The offer is apparently addressed to the physical person present. Prima facie, he, by whatever name he is called, is the person to whom the offer is made. His physical presence identified by sight and hearing preponderates over vagaries of nomenclature. "Praesentia corporis tollit errorem nominis" said Lord Bacon. Yet clearly, though difficult, it is not impossible to rebut the prima facie presumption that the offer can be accepted by the person to whom it is physically addressed. To take two extreme instances. If a man orally commissions a portrait from some unknown artist who had deliberately passed himself off, whether by disguise or merely by verbal cosmetics, as a famous painter, the imposter could not accept the offer. For, though the offer is made to him physically, it is obviously, as he knows, addressed to the famous painter. The mistake in identity on such facts is clear and the nature of the contract makes it obvious that identity was of vital importance to the offeror. At the other end of the scale, if a shopkeeper sells goods in a normal cash transaction to a man who misrepresents himself as being some well known figure, the transaction will normally be valid. For the shopkeeper was ready to sell goods for cash to the world at large, and the particular identity of the purchaser in such a contract was not of sufficient importance to override the physical presence identified by sight and hearing. Thus the nature of the proposed contract must have a strong bearing on the question whether the intention of the offeror (as understood by his offeree) was to make his offer to some other particular identity rather than to the physical person to whom it was orally offered.
In our case the facts lie in the debatable area between the two extremes. At the beginning of the negotiations, always an important consideration, the name or personality of the false Hutchinson were of no importance and there was no other identity competing with his physical presence. The plaintiffs were content to sell the car for cash to any purchaser. The contractual conversation was orally addressed to the physical identity of the false Hutchinson. The identity was the man present, and his name was merely one of his attributes. Had matters continued thus there would clearly have been a valid but voidable contract.
I accept the learned judge's view that there was no contract at the stage when the man pulled out his cheque book. From a practical point of view negotiations reached an impasse at that stage. For the vendor refused to discuss the question of selling on credit. It is argued that there was a contract as soon as the price was agreed at £717 and that from that moment either party could have sued on the contract with implied terms as to payment and delivery. That may be theoretically arguable, but in my view the judge's more realistic approach was right. Payment and delivery still needed to be discussed and the parties would be expecting to discuss them. Immediately they did discuss them it became plain that they were not ad idem and that no contract had yet been created. But, even if there had been a concluded agreement before discussion of a cheque, it was rescinded. The man tried to make Miss Ingram take a cheque. She declined and said that the deal was off. He did not demur but set himself to reconstruct the negotiations. For the moment had come which he must all along have anticipated as the crux of the negotiations, the vital crisis of the swindle. He wanted to take away the car on credit against his worthless cheque but she refused. Thereafter the negotiations were of a different kind from what the vendor had mistakenly believed them to be hitherto. The parties were no longer concerned with a cash sale of goods where the identity of the purchaser was prima facie unimportant. They were concerned with a credit sale in which both parties knew that the identity of the purchaser was of the utmost importance. She now realised that she was being asked to give to him possession of the car on the faith of his cheque.
This was an important stage of the transaction, because it demonstrated quite clearly that she was not prepared to sell on credit to the mere physical man in her drawing room, though he represented himself as a man of substance... He tried to persuade her to sell to him as P G M Hutchinson, of Stanstead House, a personality which no doubt he had selected for the purpose of inspiring confidence into his victim. This was unsuccessful. Only when she had ascertained (through her sister's short excursion to the local post office and investigation of the telephone directory) that there was a P G M Hutchinson, of Stanstead House, in the directory did she agree to sell on credit. The fact that the man wrote the name and address on the back of the cheque is an additional indication of the importance attached by the parties to the individuality of P G M Hutchinson, of Stanstead House.
It is not easy to decide whether the vendor was selling to the man in her drawing room (fraudulently misrepresented as being a man of substance with the attributes of the real Hutchinson) or to P G M Hutchinson, of Stanstead House (fraudulently misrepresented as being the man in her drawing room). Did the individuality of P G M Hutchinson, of Stanstead House, or the physical presence of the man in the room preponderate? Can it be said that the prima facie predominance of the physical presence of the false Hutchinson identified by sight and hearing was overborne by the identity of the real Hutchinson on the particular facts of this case?
The learned judge said:
"I have not the slightest hesitation in reaching the conclusion that the offer which the plaintiffs through the Misses Ingram made to accept the cheque for £717 was one made solely to, and one which was capable of being accepted only by, the honest Mr Hutchinson--ie, Mr Philip Gerald Morpeth Hutchinson, of Stanstead House, Stanstead Road, Caterham, Surrey, and that it was incapable of being accepted by the rogue Hutchinson."
... I should hesitate long before interfering with that finding of fact...
Each case must be decided on its own facts. The question in such cases is this. Has it been sufficiently shown in the particular circumstances that, contrary to the prima facie presumption, a party was not contracting with the physical person to whom he uttered the offer, but with another individual whom (to the other party's knowledge) he believed to be the physical person present. The answer to that question is a finding of fact...
The court is naturally reluctant to accept the argument that there has been a mistake in such a case as this, since it creates hardship on subsequent bona fide purchasers. The plaintiffs' unguarded transaction has caused loss to another; and unfortunately when the contract is void at common law the court cannot (as the law stands now) by its equitable powers impose terms that would produce a fairer result. However, in this case the subsequent purchasers, although the judge found that there was no mala fides, were no more wise or careful than the plaintiffs. The regrettable ease with which a dishonest person can accomplish such a fraud is partially due to the unfortunate fact that registration books are not documents of title and that registration and legal ownership are so loosely connected.