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(ii) Unilateral Mistakes

A unilateral mistake renders a contract void where one party makes a fundamental mistake relating to the identity of the other party to the agreement,[1] [2] and that other party is aware that the first party was mistaken.2 7 The so-called interpraesentes exception applies, so that if the claimant and the defendant make a contract in each other’s presence, a mistake as to identity will not vitiate it, since the parties can see with whom they are contracting.[3] Where the parties are not in each other’s presence and the claimant thinks that he or she is contracting with somebody other than the defendant, the contract will be void for mistake. So, for example, in Shogun Finance Ltd v Hudson[4] the claimant finance company lent money to a fraudster who wanted to purchase a car by hire purchase but pretended to be a different person. The finance was arranged through the car salesman by phone. The fraudster sold the car to a third party and then disappeared. The claimant sought to assert title to the car. Since the hire purchase agreement was void[5] by virtue of a unilateral mistake as to the identity of the third party, it followed that title to the car was retained by the claimant, despite the sale to the third party.

  • [1] Ingram v Little [1961] 1 QB 31; Collings v Lee [2001] 2 All ER 332; Shogun FinanceLtdvHudson [2003]UKHL 62, [2004] 1 AC 919.
  • [2] Shogun Finance Ltd v Hudson [2003] UKHL 62, [2004] 1 AC 919.
  • [3] Phillips v Brooks Ltd [1919] 2 KB 243. 259 [2003] UKHL 62, [2004] 1 AC 919.
  • [4] 260 The result would have been different had the contract only been voidable for misrepresentation, for then
  • [5] rescission of the contract would have been barred by virtue of the third party being a bona fide purchaser forvalue. See p 27, above.
 
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