I. Introduction
A contract is fundamentally composed of what is normally called a meeting of the minds of the parties involved in the agreement. In this context, it is settled that prior the signing of the contract and eventually implemented, both parties have previously recognized their reasons and intentions for adhering to the stipulations of the contract. ( 2003, 1189) This similarly indicates that the contracting parties are familiar with the provisions upheld in the contract and affirms that they will honour these passages. Furthermore, all parties signing the contract are supposed to be able to comply with these terms. It is a mutual quality and attributes to furnish parties the capacity to commit, on condition that their contracts are within the scale of their affirmed intent. (, 1995, 356) And to protect the individual parties from any abuse, both the legislative branch and the judicial branch of the government have instituted specific principles that instituted remedies and other responsibilities of the contracting parties. The case of is a recent example of such cases that has made a considerable effect on the precedent of the contract cases among legal systems adhering to common law principles. This paper will be taking into consideration the effects of the said case on the different aspects of contract law. More specifically, the study will be focusing on the effect of the said case on the principle of mistake in contract law.
II. Background of the Case
The case o fon involves a rouge who acquired the identity of a certain Mr. Patel. In using such an identity, the said individual then acquired a vehicle on hire purchase, a car to be exact. (, 2006) It was that handled the credit of Mr. Patel. Being the hire purchase company, the car dealer then contacted the said financing agency in order to inform them of the intent of Mr. Patel to purchase a veinance then conferred with the details that Mr. Patel has provided them and eventually agreed on permitting the said transaction by financing the said hire purchase agreement.
In doing so, the setting consequently established a situainance purchased the vehicle with the expectation of Mr. Patel of renting it as an ultimate customer. And given the fact thate has been fooled by the rogue as to posing as Mr. Patel, the financing agency were in the impression that they were actually renting the said vehicle to the real Mr. Patel. The rouge then sold the said vehicle to a certain Mr. Hudson. This is what brought about the issues in the case, if the contract was deemed valid by the courts (and eventually voidable by means of misrepresentation), claimant may have a good title to the vehicle as stated in the Hire Purchase Act of 1964. On the other hand, if the courts deemed it to be void, the vehicle then continues to be a property of , leaving Mr. Hudson no right to the car.
A. Court of Appeals
When the said case was forwarded to the court of appeals, the petition of Hudson was eventually dismissed. This took place even though there is a presence of a dissenting opinion on againstg. According to the said opinion, there is a strong policy relating to the grounds to which Shogun Finance should be held liable for the loss of Mr. Hudson. The said justice’s argument basically took into consideration the logic that in the said situation, the dealer was putting up his/her merchandise up for sale face to face. claimed that there is a rebuttable belief that the said individual is actually geared towards selling to the individual in front of him/her. He stated even further that the situation is the same even if the said individual is a rogue.
However, the other justices of the Court of Appeals () saw it otherwise. They claimed that the said issue is a matter of policy, and to some extent, was rather uncomplicated. They pointed out the Hire Purchase Act of 1964 where an individual is able to pass any form of title to a third party. The said justices indicated that the rogue was not in any way considered a debtor under the agreement, given the fact that he took on the identity of Mr. Patel. Consequently, the case was forwarded to the House of Lords.
B. House of Lords
When the case arrived at the House of Lords, the said body took on the task to clarify the specific areas of law which may be used in favor of Mr. Hudson. Moreover, the House of Lords similarly made sure that a specific set of guidelines will be instituted such that any other case similar to this will be addressed systematically in the future. They have reviewed previous cases that have, to some extent, bear similarities to the situations in the said case.y [1972]) In the end, the House of Lords upheld the decision of the Court of Appeals regarding the claim of Hudson., 2006)
The opinion provided related the case in the context of consumer credit transaction. He claimed that the identity of the consumer is vital to the transaction in general not only to verify that the said consumer will be able to comply with the terms of the contract, but also to take into consideration the credit rating of the said individual. (t, 2006) This means that the background check on the said individual precedes the actual acceptance of the credit company of the finance proposal provided by Mr. Patel. This indicates that if only the Shogun has done its job well enough, the said financing company would have not accepted the said proposal and in so doing prevented the customer from acquiring the vehicle.
The argument of further claimed that there was an error in the way Hudson has attacked the case. (, 2006) The said justice stated that the case was basically based on a written agreement. And the said agreement between Mr. Patel aun was the only pertinent contract in the case, given that there was no contract to begin with. It means that the contract between Mr. Patel and Shogun was void from the start. This is because there was no offer from the real Mr. Patel to accept in the first place.
In looking at the said arguments presented by, it appears that the said case is concerned with the basic elements of contract la(w 2006) It dealt with the concepts of offer and acceptance, mutual agreement, written agreement and the legal principle of nemo dat non quod habet. ( 1991, 97) The opinion indicated that the claimant regarded his situation as a sale of merchandise, specifically the vehicle from Mr. Patel. He failed to recognize that he was dealing with a financing agency, thus, may well be a case arising from credit consumer transactions. The claimant essentially failed to recognize that it is a matter of basic contract law.
This contention was similarly upheld byr stating that the case was a matter of offer and acceptance. And with such instances, the court should address these issues in an objective mannerr argued that the contention of Hudson revealed that it held the case as a matter of face-to-face contract in relation to concepts of agency. (, 2006) This was seen as erroneous by the opinioer. On the other hand, provided dissenting opinion regarding the matter. They stated that in a situation where a couple of individuals who have dealt with each other regardless of the medium to which they have communicated formed a contract provided that they both consent to the terms of the contract. This means that their contention agrees that a contract is made between the claimant and the defendant notwithstanding that there is deception in the said dealing. And in so doing both are bound by the contract, however, the said contract should be voidable given the deception of the other party. Thus the said argument claims that the contract is not void for all purposes all though the period of its supposed existence.
III. Consequences on Common Law
The case provided by had several implications on common law doctrines. As stated in the decision of the House of Lords, the said case has tackled several issues on contract law. However, the fundamental concepts have taken precedence over the more complex arguments even relating legislation. This part of the study will be taking into account the effects of the case on the principles of mistake, offer and acceptance, and the disposition of non owners. The discussions on the said concepts are going to be based on the decisions made by the House of Lords. Moreover, the use of other similar cases will be used to establish the arguments in every section.
A. Mistake In the context of contract law, an underlying principle of caveat emptor still is generally accepted. However, there are still instances where parties involved in an agreement still takes place. A mistake is generally known as a concept that attempts to “negative or in some cases nullify consent.” ( [1932] AC 161, in , 2006) This shows that a mistake has the power to render an agreement null and void. However, there is the prerequisite that the mistake must be first classified as an operative mistake in order to make an agreement voidable. In the context of common law, for a mistake to be considered operative, the contract must then be void from the very beginning. This means that from the start of the contract or agreement, the properties that has been passed based on the agreement is already void, consequently the obligations that rise from that agreement may then be inexistent. In some instances, several judgments in the context of contract law reveal several conditions where a case may be void based on common law doctrines through the principle of mistake. Nevertheless, there are also instances where the contact is valid at law but may be voidable because of the condition of its equity. Thus, it is still voidable on the grounds of mistake. ( 1997, 112) There are several heads to which mistake is classified: common, mutual, unilateral, mistake to a person, mistake on documents. (, 2003, 829) In this part of the study, a focus on the mistake to the person will be provided given its close accordance to the cas. Moreover specific discussions on issues on face-to-face transactions and written correspondence will also be taken into consideration. In particular, there are issues presented by the case regarding the individual intended to be contracted to be the mistaken party, who the offer is intended to, or whether that individual is supposed to accept that offer. 1. Unilateral Mistake
The case of is considered as a case of unilateral mistake. In this kind of case, a party is primarily mistaken with reference to the contract and the other party is conscious of the mistake. Similarly, the conditions are such that the parties involved may be believed to be or assumed to be conscious of it. In order for a unilateral mistake to be considered operative, the mistake by a party have to be as to a basic term of the agreement itself, instead of an mistake of judgment as to the value or quality of the product or merchandise. The dissimilarity is presented by a pair of cases. In the first case it was considered a mistake as to a condition of the contract, while in the second it was considered a mistake as to the value or quality of the product or merchandise. Is (1939) 3 All ER 566, the defendants tendered hare skins to the claimant at a definite value ‘per pound’ but had planned to offer them at the same cost ‘per piece’. (inl, 2003, 11) The price of a piece was a third that of a pound. The courts decided that the conditions were such that the claimants ought to have seen the defendants’ mistake which, as it entailed a condition of the contract. And therefore, the courts deemed the contract void. In the cases(1871) LR 6 QB 597), the defendant was revealed a taster of oats by the claimant. (ine, 1998) The defendant was led to belief that they were “old” oats. It must be noted that the defendant did not want “new” oats. However, the claimant gave new oats. The court’s claim was of the view that the mistake was purely as to the value of the merchandise or product and could not cause the contract to be void, even supposing the claimant seller is aware of the mistake. However, if the purchaser mistakenly supposed that the seller had guaranteed that the oats were indeed old and the seller was conscious of this mistake, the mistake would then be considered operative. If a sale of oats supposed by one party to be assured ‘old’ and not proposed by the other party to be so indicated, the contract may then be rendered void.
2. Face-to-face
This concept is legally known as inter praesentes. (, 1996, 144) In this concept, there is an assumption that the mistaken party wants to be in contract with the other individual who is present physically, this means that the said individual is able to given an offer and the offer is able to be accepted by the said individual. The context of identity, regardless of its truthfulness may well be readily remedied. This is done by rendering the contract void due to fraudulent misrepresentation. [1919] 2 KB 243, in , 2006)
However, there is this case stating that there is an addition requirement for a contract to be considered annulled. Specifically, in (1863) 1 H. & C. 803, it stated that the mistaken party must have acquired the reasonable procedures to validate the identity of the other party prior to the actual implantation of the contract. (, 2006) This means that there is the inherent assumption in these types of cases that the one party has good knowledge of the authenticity of the other party. Thus, the said parties should have an identifiable individual to whom he/she intends to make contractual relations.
3. Written Correspondence
Similarly, it is required in a contractual relationship that a written correspondence is made. This means that the mistaken party would want to create contractual relations with the individual named in the written correspondence. ( (1878) 3 App Cas 459 , 1996, 125) In the casce, it stated that the offer could only be accepted by the actual individual written in the said written correspondence. This means that on the occasion that forged materials and documents are given to the other party, the contract made consequently is considered void. This is because the said written correspondence has been done by a rogue, and thus, without any legal consent given by that actual person’s authority.
In instances where there is no real individual in existence, it could be argued that there is no mistake of identity as seen in the case of (1897) 14 TLR 98. To some extent, the mistaken party should be considered at fault on this context considering they have not done the necessary requirements in establishing an identifiable person to contract with.
4. Mistake as to a Person
In this context, a party makes contractual relations to a second party which the former believes to be a third party (or someone else for that matter). ( (1878) 3 App Cas 459 in, 1996, 125) In the case of Mr. Hudson, he should have considered the real Mr. Patel as a party to the agreement considering the said individual is named as part of the agreement. In the Hire Purchase Act, the purchaser is protected from the debtor. In the case, Mr. Patel is deemed to be the debtor. However, he was not the one who sold the car to Mr. Hudson. This was carried out by someone posing as Mr. Patel, who have no right to the vehicle or even confer the title of the vehicle. In so doing, Mr. Hudson is legally responsible to the value of the car.
The concept to mistake as to the identity is not regarded as an issue in the judgment of . He noted that the case was based on the construction of the written contract. Furthermore, the decision made in the said case reveals that a mistaken party is able to recover the goods, in this case the vehicle, from Mr. Hudson, the innocent third party. This means that in such cases, entities like the car dealer was secluded from the repercussions brought about by cases of fraud.
B. Offer and Acceptance
Offer and acceptance are among the initial steps in any transactions. For clarity and coherence, the concept of an offer will be discussed separately with the concept of acceptance. An offer should be unambiguous, comprehensive, and communicated to the other party. Thus, certain information disseminating materials that advertises the product to the public is not considered as an offer. An action that is deemed not an offer is portrayed in (1893) wherein the correspondence is made through telegram. Moreover, the Privy Council noted that the offer was not binding since the mere statement of the lowest price to which the defendant was supposedly seeking to sell does not imply a clear indication of a contract between the two parties. The transaction was just a mere transfer of information. Moreover, once an offer is completed, it could still be withdrawn in any period before the acceptance. However, if the offer is under seal, it could never be revoked. Similarly, it is also possible for an offer to terminate provided that the cut-off date for the acceptance has transpired. On the other hand, an acceptance is the action that the other party undertakes in order to validate a contract. Thus, an acceptance denotes that the other party indisputably agrees with the terms of the contract. According to (1992), the process of acceptance is twofold. The first one is the fact of acceptance and the other is the communication of acceptance. The offeror is able to dictate the stipulations of the acceptance. Offers could place precise conditions on acceptance and the acceptor is compelled to follow.
As seen in the decision of the case, the issues with regards to mistaken identity and misrepresentation was considered. To this end, the inherent character of the offer in this case was deemed to be the key in resolving these issues. The fact of the case stated that the documents forwarded t d are deemed to be forged by the rogue posing as Mr. Patel. For this matter, the said offer provided by the rogue may not be considered as a sufficient offer considering that it did not came from the actual Mr. Patel. Moreover, the said offer is not capable of acceptance on the part of. And in taking into consideration the cited cases above, without a suitable offer and acceptance, or an actual consensus among the parties involved, a contract is inexistent.
C. Disposition of Non-Owners
The Shogun case has similarly been considered in hire purchase cases. Specifically, the disposition of the non-owner is considered in this context. A purchaser is given the right to keep vehicles when a seller has acquired the goods in an agreement taking a hire-purchase arrangement. This is actually stated in section 27 of the Hire Purchase Act 1964. When taking into consideration of the effect of the case, it confirms the absence of face-to-face contact. This is brought about by the fact that the pretense made by an impostor posing as Mr. Patel deceived the garage sales staff. This consequently means that in similar cases, the rule posed in (1972) 1 QB 198 did not apply. ( 2006) This also entails that there was no contract to begin with. The hire-purchase contract is void considering the said offer was not accepted by the actual Mr. Patel.
In so doing, the court held that the Hire Purchase Act is not in effect considering there was no agreement. The court hheld should be able to acquire the necessary damages corresponding to the actual price of the vehicle. On the other hand, Mr. Hudson is instructed to return the vehicle. To a certain extent, the decision made in this case is similarly relevant to issues relating to voidable titles.
IV. Conclusion
The context of mistake as provided by thn case reveled to have been a spawn of a long debate on the said legal issue. The decision in the said case has considerably helped in indicating what is to be done in such cases where such contracts are existent. Though there is still considerable room for the development on the part of legislation, the effects of the case in the legal system has considerably been foreseeable.
To illustrate, the financial institutions will be considerably receiving such a decision from the case as something to work to their advantage. With the advent and rise of credit institutions and other financing companies, the decision made by the could be used to combat any form of fraud brought about by perverse intentions from rogues and other organizations.
Moreover, there are still areas in society that has yet to be protected by the legal system, especially by then case. Given the dissenting opinionst, it appears that they are trying to change the law regarding the selling of goods. As discussed above, goods are either sold face-to-face or by written correspondence, with the opinions of the said justices, it appears that they want to take in hand the issues present in this sector. It is in these second hand purchasers that appear to be neglected on this case. And with constant review on the proposals made by the dissenting opinions of, it continues to be more appealing than the actual decision of the.
The research made on the case of has been subjected to purely electronic research. The first step that the author took is to search for the actual transcript of the case as published by the House of Lords. In the said publication, it stated that the said decision upheld the decision of the Court of Appeals. This prompted the researcher to similarly look on the actual transcript published by the Court of Appeals on their decision on the similar case. This established the foundations and basic facts of the case. It also served as an introduction of the case on the part of the author.
Within the decision of the , the author then looked into the cited cases to which the decision of and the other members are based on. It is in this search that the specific legal principles are recognized by the author. The search was done through the use of Google as its search engine. Given that the citations are presented in a complete manner, the search for the said cases was not complicated. The legal doctrines on offer and acceptance, mistake, and other concepts of contract law were acquired using that method.
On the other hand, the question appeared to have indicated that there is an actual effect on the laws pertaining to mistaken identity with regards to contract law. In looking at the said citations in the HL decision, it appeared early on that the decision was not focused primarily on the concept of mistake and mistaken identity with regards to contract law. The decision has basically indicated that in taking into specific cases, the arguments that the claimant should take must be more basic and specifically pertains to the agreement that took place. To illustrate, considerations issues pertaining to hire-purchase agreements, the researcher found out that in such cases, a debtor and a creditor is involved.
The consequent discussions then are based on the understanding of the author as to the effect of the said case not only in cases of mistaken identity, but in the entire legal system as a whole. To illustrate, the discussions similarly took on the impact of the said case on legislation. Specifically, it showed that certain legislation could deem particular contracts as voidable as shown in the context of Hire Purchase Act 1964 and other equivalent acts in other legal systems.
V. References
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