Cundy v Lindsay [1877–78]

Cundy v Lindsay [1877–78] LR 3 App Cas 459 is a notable English contract law case that dealt with the issue of mistake, specifically introducing the concept that contracts could be automatically void for mistake as to identity when it is of crucial importance. This case has been a subject of debate and criticism regarding its distinction from subsequent cases like Phillips v Brooks [1919], where parties contracting face-to-face are considered voidable for fraud, protecting third-party buyers.

Lindsay & Co, the plaintiffs, sued Cundy to reclaim handkerchiefs after being defrauded by a rogue who had sold the goods to Cundy. Lindsay & Co, manufacturers of linen handkerchiefs, received correspondence from a man named Blenkarn, who falsely represented himself as Blenkiron & Co. Lindsay & Co, mistakenly believing the correspondence to be from the reputable business Blenkiron & Co., delivered a large order of handkerchiefs to Blenkarn. The rogue, in turn, sold the handkerchiefs to Cundy, who was an innocent third party. When Blenkarn failed to pay, Lindsay & Co sued Cundy for the goods.

The Divisional Court held that Lindsay could not recover the handkerchiefs from Cundy. The court emphasised that where a contract is voidable due to fraud, it can be avoided only as long as the goods remain with the fraudulent party or someone who takes them with notice. However, when goods are acquired by a bona fide purchaser, the contract cannot be avoided.

The Court of Appeal overturned the Divisional Court's decision, stating that Lindsay could recover the handkerchiefs since the mistake about the identity of the rogue voided the contract from the start.

The House of Lords held that Lindsay & Co had intended to deal only with Blenkiron & Co, not the rogue. Therefore, there was no agreement or contract between Lindsay & Co and the rogue, and title did not pass to the rogue or Cundy. Cundy had to return the goods. Lord Cairns explained that a contract could not have arisen between Lindsay & Co and the dishonest rogue. Their minds never rested upon him, and there was no consensus of mind leading to any agreement. As between Lindsay & Co and the rogue, there was merely one side to a contract, where two sides would be required for a valid contract.

The case established that the contract was void, not voidable. However, critics argue that this distinction from subsequent cases is problematic. In cases like Phillips v Brooks, contracts involving face-to-face dealings are presumed to be valid, raising concerns about the consistency of legal principles. Despite still being considered good law, this distinction has faced criticism and is perceived as eroded in contemporary legal discussions.
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