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Contract Law

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Introduction

The branch of law which is most susceptible to uncertainties and difficulties is that of law of contract, and especially in the event an error occurs at the time of formation of the contract. This is the doctrine of mistake and in light of the same the above statement was made by a renowned author in response to the case of Sowler v. Potter (1940). With the passage of time this doctrine has shown increased complicity especially in the case of unilateral mistakes. Another branch of contract law which governs sale of goods is based on the idiom of nemo dat quod non habet is the basic general rule followed by the parties and the courts. It essentially means that a person cannot transfer a better title to any other person than he himself is in possession of.

Also known as the nemo dat rule can be applied in the case of nemo dat conflicts. One of the parties to the conflict shall claim benefit of the said rule, and on the other hand the other party can claim protection under the periphery of one of the exceptions to the said rule. In such agreements, firstly the original owner of the products shall make a sale to the middle person, who in turn shall the same to an innocent purchaser. In the event the middleman makes a misrepresentation of the identity, then the agreement so entered between them shall be considered voidable, but not void. Therefore, with the application of this rule the middleman is entitled to pass a title which is also voidable in nature to the innocent buyer, who eventually can take protection under the rule of nemo dat.    

Mistaken identity is considered as the defence in the criminal law that claims the actual innocence of the criminal defendant and thus attempts to gain the evidence as per the eyewitness to the crime. Mistake within the contract is considered as the complex area of contract law. However, it is the general rule that through mistaken identity it would affect the contractual parties involved within the contract. Mistaken identity could be of two different types-

Mistaken by law-

It is an effective law that is prevailed by the country in regard to put the law upon perfect condition. However, it is considered as the legal principle which refers to one or more errors and also made by the person in regard to understand how it is applicable to the past activity and thus analyse within the court of law. Mistaken law is the defence that is provided to criminal defendant which is misunderstood or ignored at the time of carrying out the subject.

Mistaken of facts-

It states that the mistakes which are involved within the facts and thus describes that such type of errors and omissions are occurred. It is also stated that such errors are considered as the crime and thus criminal defendant could prove that mistake reasonably considered as the crime and usually held in regard to overcome the liability of the defendant. Also, such type of facts arises at the time when parties are making the contract they did certain mistake and thus it is known as mistake of facts.

Here, different cases are being analysed and thus as per the Shogun Finance v Hudson (2003) case, it can be evaluated that a rogue purchased a car upon hire purchase terms from the care dealer. However, he provided a false driving license of Mr. Patel. Now the car dealer send the driving license to the claimant finance company and asked for details upon the application form. Then the finance company's credit team search for Mr. Patel and then he asked the dealer to let the rogue to have the car. Then the rogue paid 10% deposit and thus drove off with the car. Later, he sold the car to the defendant and signed the finance agreement. Later, claimant brought an action against the defendant claiming that he is the owner of the care as the contract was void for mistake.

In such type of case, mistaken identity could be applied as the court of law decides that the contract was void because of the happened mistake because the contract was concluded within the finance company and rogue was not present at the time of making the contract. Here, the mistaken identify arises in the starting only when rogue introduces himself as the Mr. Patel and provided the same driving license. Hence, it could be stated that the identity of the person was crucial in regard to make the contract because Mr. Patel made the credit check as it is essential because without identifying the credit details claimant would not have allowed to get the car. Here, it is also essential to identify the person who were involved in the contract because Mr. Patel made the credit check and thus claimant was not allowed to take the car before making the credit check. Here, judgement was given that there should be no distinction made within the contracts made inter absentes and contract inter praesentes. Shogun Finance v Hudson (2003).

Another case regarding mistaken identity was the case of Phillips v Brooks Ltd. In such case, the English Contract Law concerns the mistake and also held responsible that a person is deemed to enter into the contract with the person in front of them unless they can substantially prove that they instead intending to deal with another person. On 15 April 1918, there was a man named Mr. North entered into Phillip's jewellery shop and thus said that he is Sir George Bullough. Thus, it given wrong identity as the mistaken the other party by giving wrong name. Then he provided a cheque for Pound 3000 for buying certain pearls and a ring. He also provided his wrong address that he lives in St. Jame's Square. However, Mr. Phillips checked the phone directory and thus found that there was some person with the same name.

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After checking the name, owner of the shop Mr. Phillips asked that if he would like to take the jewellery with him and Mr. North was a fraud person said he would leave the pearls but take the ring due to his wife's birthday tomorrow. Later, Mr. North pawned the ring to Brooks Ltd and obtain Pound 350. Later, the cheque was dishonoured and then Phillips sued Brooks Ltd to get the ring back. Thus, it can be identified from the facts that it was a clear case of mistaken identity as the fraud person here in the case who is Mr. North and thus gives wrong identity. The mistake here found was unilateral and thus court decide that the contract was not void. Phillips v. Brooks (1919).

Similarly, there is another case regarding mistaken identity in which a rogue ordered goods from the claimant with the help of using a printed letter head and thus claims to be the company called Hallum & Co. whose offices are in Belfast and Ghent. It was a fraudulent action as no such company exists in real. Without knowing such fact the claimant sent the goods on credit and thus rogue person sold the goods to other parties who purchased it in good faith. Later, after committing the fraud, rogue disappeared without paying the right amount for the goods. Further, the claimants brought an action for conversion of the goods based on their unilateral mistake as identified. In this the contract was not held void for mistake as they could not assess an existing company called Hallum & Co. Here, the mistake was on the end of identifying the attributes of the company.

Thus, it is stated as the misrepresentation of the goods and thus rogue misrepresented the goods. Here, the identified facts is that the plaintiff who had been asked to supply the products misrepresented himself and thus sold the goods to other person. Thus, unilateral mistake was identified and thus here third party made the mistake. Further, the result was found that the plaintiff in such case had contracted the third party who is not liable for losses. King's Norton Metal Co. Ltd. v. Edridge, Merrett &Co. Ltd.

As described earlier no person can transfer a title which he does not possess and the same is represented by the “nemo dat quod non habet”. Commonly this is known as the nemo dat rule which can be applied on situations wherein the original owner of the product sells it to a middle person, who eventually sells to an innocent buyer. The parties to the contract can either claim benefit of this rule or take protection under the exception to the rule. Parties to the contract can enter into dealings either face to face or through correspondence.

The former dealing refers to the type of parties which are sufficiently proximate to each other, to the extent that no other party is allowed to intervene in the process of communication or dealing. On the other correspondence or the arm's length deals can be identified wherein the parties to the contract are not proximate to each other and communicate through some sort of medium which can be in the form of a mail. In the case parties are dealing face to face it is presumed by the law that each of the parties intend to deal with each of the opposite parties as they exist in proximity to each other. In such a situation the mistaken identity is empowered to make the contract only voidable as the parties were present before each other or had the opportunity to identify them by sight or hear them. Therefore with the assistance of this rule bonafide third party buyers are protected against fraud sellers.

In the case of Phillips v. Brooks Ltd (1919) the facts of the case were that a person entered into a jewellery shop and represented himself as Sir George Bullough. He selected some of the products at the store and made the payment of the same through a cheque. The representatives at the store checked the address provided by the person and handed over the selected jewellery to him. However, to the shock of the representatives the cheque was dishonoured and a nemo dat conflict has arisen as the jewellery was pawned to an innocent pawnbroker who was acting in good faith. It was held in the case that since the seller acted in good faith and intended to enter into a contract with the person who visited the store.

On applying the principles of Contract law it can be said that a valid contract was entered into between the parties, however, in accordance to the presumption of face to face deal such agreements are voidable in nature. The principles of contract law have been specifically  satisfied as an agreement was reached between the original owner and the middleman, the same was attached with consensus ad idem between the parties involved and present before each other. However, this case of criticized in the case of Lake v. Simmons (1927) wherein it was opined by the court has reached to the decision as the contract was concluded prior to disclosure of the identity of the said person. Further, in the case of Ingram v. Little (1961) it was held by the court that in every face to face dealing a presumption shall exist.

Similar circumstances were faced in case of Lewis v. Avery (1971), Lewis decided to sell his car that is a mini cooper. An interesting proposal was received by him through a man who turned out to be rogue. The identity that he used was of a movie celebrity that is Richard Green. Lewis could not identify any flaws in his identity because rogue used an old film-city pass as a proof of his identity. A cheque declaring payable amount of £430 to Lewis was formulated by the fraudster. He took the car along with log book and gave Lewis respective cheque which turned out to be invalid. Later on, rogue sold the car further to Avery for an amount of £200 in good faith. The contract was face to face in both the mediums. Although mistake of identity took place in the complete procedure but an effective contract did take place. It can be said that it was voidable and liable for case of mistaken identity. This case involved two innocent parties and rogue took advantage of both Lewis and Avery. If Lewis would have called off the contract then, it would not have been a legitimate agreement. Fault completely relies on part of Lewis because he misunderstood rogue as Richard Green. Hence, the doctrine of mistake of identity is applicable in this case. In the two cases an example of frailty of relaxed contractualism is reflected.

A rogue person imaging himself as Durlabh Patel went to dealership store for purchase of car. That particular dealership had an agreement with Shogun Finance which was also known as floor-plan agreement. Rogue was mediator between dealers and Shogun Finance. The finance company was owner of these cars. Rogue pretended this fraud identity for hire-purchase agreement. After completion of contract and purchase procedure at the end of rogue, the car was further sold to Hudson. Shogun Finance did not receive their amount and detected that car now belonged to Hudson. They filed a case against Hudson. Here, the contract was made face to face and thus claimant finance company need to identify the details of the application form in regard to provide proper credit to Mr. Patel.

Thus, it is essential for claimant to brought an action against the defendant claiming to be the owner of the car and thus make the contract was void for mistake. Also, here, the court decides that the contact was void and thus mistake was carried out by finance company and rogue as well. Here, the identity of the person was crucial and thus it was mistaken which affects the reliability of the contract. However, the finance company and the rogue was mistaken identity and thus affects the person. Thus, it can be evaluated that face to face contract is crucial as it provides options for parties to make a great when knowing each other personally. Also, there is a strong resumption that each party intends to deal with the party and thus identifies there relation so that contract can be carried out in an effective way. Also, court of law decides and give the decision that it is essential for both the parties entering into the contract to make face to face contract in relation to identify the innocent and culprit party.

In accordance with the case of Citibank NA v Brow Shipley in accordance with this case, Rogue claimed to be signatory for the account of the company towards the issuing bank. There was phone call that requested to buy Deutschmarks and US dollars. This included bankers draft that was from that issuing bank. Then bankers draft was obtained from banker and that was taken from issuing bank and that was presented for receiving bank for the exchange of money. For losses, issuing bank sued and claiming for conversion and they claimed that the tile that was used in the check was never passed for the receiving bank. As they never get the title from rogue. As a result, there was not contract between the banks. As per the count, Rogue was the only one who was conduit on the contract. Further, the title was not passed by rogue. For the issuing bank, the identity of rogue was not fundamental. The receiving bank did not covert the draft which had to be presented in the form of payment which did not happened.

From the above, done cases, it can be stated that with time there are many changes that took place in the law. All these were done in order to make sure that they will be able to protect the interest of people and society. Further, it is important that backs of any other organization take proper steps and care so that they will be able to avoid the issues or negative points which affects the contract. The party that face damages due to improper care, then they need to be provided with claim for the damages that were caused to them.

References

  • Alessio Ishizaka, Craig Pearman and Philippe Nemery. AHPSort: an AHP-based method for sorting problems [2012] International Journal of Production Research 50(17) pp.4767-4784.
  • Andrews Niel.  Sources and General Principles of English Contract Law. In Arbitration and Contract Law [2016] Springer International Publishing.
  • Atul Porwal and  Kasun N Hewage. Building Information Modeling (BIM) partnering framework for public construction projects [2013] Automation in Construction 31 pp.204-214.
  • Bunni Nael. The FIDIC forms of contract. [2013] John Wiley & Sons.
  • Carlos Oliveira Cruz and Rui Cunha Marques. Flexible contracts to cope with uncertainty in public–private partnerships. [2013] International Journal of Project Management 31(3) pp. 473-483.
  • Cartwright John. Contract law: An introduction to the English law of contract for the civil lawyer [2016] Bloomsbury Publishing.
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