Phillips v Brooks Ltd [1919]

Phillips v Brooks Ltd [1919] 2 KB 243 is a pivotal English contract law case addressing the concept of mistake. The court held that a person is presumed to contract with the individual present in front of them, unless they can substantially prove their intention to deal with someone else. This principle is especially relevant in face-to-face transactions, and it is analogous to the later case of Shogun Finance Ltd v Hudson [2003].

The facts of the case unfolded on April 15, 1918, when an individual named North entered Phillips' jewellery shop, claiming to be Sir George Bullough. North wrote a fraudulent cheque for £3000 to purchase pearls and a ring. Mr Phillips, the jeweller, checked the phone directory and found a person by that name living in St James's Square. Believing he was dealing with Sir George Bullough, Mr Phillips agreed to leave the pearls but allowed North to take the ring, purportedly for his wife's upcoming birthday. Subsequently, North pawned the ring to Brooks Ltd for £350. When the cheque was dishonoured, Mr Phillips sued Brooks Ltd to reclaim the ring.

The court, building on the precedent established in Cundy v Lindsay [1878], which deemed contracts automatically void for mistake to identity, clarified the application of this principle in face-to-face transactions. Horridge J, in delivering the judgment, concluded that Mr Phillips, while hoping to contract with Sir George Bullough, had, in reality, contracted with whoever entered his shop, taking the risk that the person may not be who they claimed to be. The court considered the contract voidable for fraud, meaning that title passed to the rogue buyer (North) and subsequently to the third-party buyer (Brooks Ltd).

The judgment emphasised that the contract was not void but voidable due to fraud. Horridge J stated that the minds of the parties had met and agreed on all the terms of the sale, and the seller's intention was to sell to the person present and identified by sight and hearing. The court's decision illustrated the significance of face-to-face transactions and how mistaken identity could render a contract voidable for fraud while still passing title to a third-party buyer.
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