Lewis v Averay

In a face-to-face transaction, the law presumes that a seller intends to contract with the person physically present. Fraudulent impersonation does not ordinarily make the apparent contract void from the beginning. The contract is voidable for fraud and remains effective until avoided.

The presumption may be displaced where the circumstances sufficiently show that the seller intended to contract only with a different, identified person, and the person present ought to have understood that intention. Unless it is displaced, property may pass under the voidable contract. A bona fide purchaser who acquires the goods before avoidance obtains good title.

The plaintiff advertised his motor car for sale. A rogue inspected it in person and falsely represented that he was a well-known actor. After examining a forged studio pass bearing the rogue’s photograph, the plaintiff accepted his cheque and delivered the car, log-book and test certificate. The cheque was subsequently dishonoured.

Before the fraud was discovered, the rogue sold the car to the defendant, who bought it in good faith and without notice of the fraud. The plaintiff brought an action for conversion. A deputy county court judge found for the plaintiff and awarded £330 damages.

The defendant appealed. The central issue was whether the plaintiff’s mistake about the rogue’s identity made their apparent contract void, so that no title passed, or merely voidable, so that the defendant acquired good title before avoidance.

1. Appeal allowed unanimously. The transaction between the plaintiff and the rogue created a contract of sale. Although induced by fraud, it was voidable rather than void. Property passed to the rogue and then to the defendant, who purchased in good faith before the contract was avoided. Judgment was entered for the defendant.

2. Lord Denning MR held that contractual formation is determined objectively from the parties’ outward dealings, rather than their undisclosed intentions. The plaintiff negotiated with the person physically present, agreed a price, delivered the car and documents, accepted a cheque and signed a receipt. Those acts objectively established a contract with the rogue.

3. Lord Denning MR rejected the proposition that a mistake about the other party’s identity necessarily makes a contract void from its inception. He considered the distinction between a mistake about identity and one about attributes artificial. His preferred rule was that an apparent contract affected by such a mistake is voidable, and may be rescinded only before an innocent third party acquires rights under it.

4. Phillimore LJ rested his decision on a narrower ground. In a face-to-face dealing there is a prima facie presumption that the offer is addressed to the person physically present. That presumption can be displaced if the circumstances sufficiently demonstrate that the offer was intended only for another identified person and the person present ought to have understood this. Nothing in the evidence displaced the presumption here. The delivery of the car and log-book, acceptance of the cheque and exchange of receipts made it impossible to conclude that no contract had been made.

5. Megaw LJ agreed that the appeal should be allowed. Even if the test stated by the majority in Ingram v Little were valid, the plaintiff’s evidence did not show that the rogue’s identity was of vital importance when the offer was made. The mistake concerned the rogue’s attributes or creditworthiness.

6. The county court judgment and damages award were set aside. There was no order as to costs between the parties, apart from the necessary legal aid taxation.

1. Court of Appeal: The defendant’s appeal was allowed unanimously. The county court judgment was set aside and judgment was entered for the defendant.
2. Bromley County Court: His Honour Deputy Judge Ellison entered judgment for the plaintiff and awarded £330 damages for conversion.