Shogun Finance Ltd v Hudson [2003]

Shogun Finance Ltd v Hudson [2003] UKHL 62 is an English contract law concerning mistaken identity and its implications for the rescission of a contract. The case centred around a rogue individual who, using false information, purchased a Mitsubishi Shogun on hire purchase from a dealer, misrepresenting himself as Mr Patel and presenting Mr Patel's driving licence. Shogun Finance, upon communication with the dealer, conducted a credit check on Mr Patel and authorised the hire purchase agreement, unaware of the rogue's deception.

The rogue subsequently sold the car to Mr Norman Hudson, who had no knowledge of the vehicle's status as subject to a hire purchase agreement with Shogun Finance. When Shogun Finance sought the return of its vehicle, Mr Hudson relied on Section 27 of the Hire Purchase Act 1964, arguing that as a non-trade buyer who purchased the car in good faith from a hirer under a hire purchase agreement, he became the owner.

In a 3-2 decision, the majority of the House of Lords held that there was no valid contract of hire purchase between Shogun Finance and the rogue. As a result, Section 27 of the Hire Purchase Act did not apply, and the car did not legally belong to Mr Hudson. The majority followed the precedent set in Cundy v Lindsay [1878], emphasising that a contract where identity is crucial becomes void if the purchaser lies about their identity. The face-to-face exemption established in Phillips v Brooks Ltd [1919] was deemed inapplicable, as the seller in this case was the finance company, not the dealer.

Lord Nicholls and Lord Millett dissented, advocating for a policy that would protect the good-faith purchaser in all cases, regardless of the face-to-face distinction. They argued that contracts involving mistaken identity should be voidable rather than immediately void, allowing for protection of third parties if the original seller did not repudiate the contract before the goods were sold on.

The decision in Shogun Finance Ltd v Hudson maintained the face-to-face distinction in cases of mistaken identity, which has been criticised as artificial and unfair to third parties. Critics argue that this distinction places an undue burden on innocent third parties, who bear the entire loss in situations where the original seller could have taken better measures to uncover fraud. The case underscores the ongoing debate about the appropriate legal treatment of contracts involving mistaken identity and its impact on innocent third parties.
Back to blog

UOL Case Bank

Upon joining, you become a valuable UOL student and gain instant access to over 2,100 case summaries. UOL Case Bank is constantly expanding. Speed up your revision with us now.

Subscribe Now

Where are our students from?

Yale University
Council of Europe
Baker Mckenzie 
University of Chicago
Columbia University
New York University
University of Michigan 
INSEAD
University College London (UCL)
London School of Economics (LSE)
King’s College London (KCL)
University of London
University of Manchester
University of Zurich
University of York
Brandeis University
University of Exeter
University of Sheffield
Boston University
University of Washington
University of Leeds
University of Law
Royal Holloway, University of London 
Birkbeck, University of London
SOAS, University of London
University of Kent
University of Hull
Queen’s University Belfast
Toronto Metropolitan University
Hong Kong University of Science and Technology
University of Buckingham

  • Criminal Practice

    Diagrams and Charts

    Our carefully designed diagrams and charts will guide you through complex legal issues.

  • Criminal Law

    Clear and Succinct Definitions

    Key concepts are concisely defined to help you understand legal topics quickly.

  • Property Law

    Statutory Provisions

    Statutory provisions are provided side by side with legal concepts to help you swiftly locate the relevant legislation.

  • Public Law

    Case Summaries

    We have summarised important cases for you so that you don't need to read long and boring cases.

  • Evidence

    Rules and Exceptions

    Rules and exceptions are clearly listed so that you know when a rule applies and when it doesn't.

  • Company Law

    Terminology

    Legal terms and key concepts are explained at the beginning of each chapter to help you learn efficiently.

  • Case Law

    Case law is provided side by side with legal concepts so that you know how legal principles and precedents were established.

  • Law Exam Guide

    Law Essay Guide

    You will learn essential law exam skills and essay writing techniques that are not taught in class.

  • Law Exam Guide

    Problem Question Guide

    We will show you how to answer problem questions step by step to achieve first-class results.

  • Conflict of Laws

    Structured Explanations

    Complex legal concepts are broken down into concise and digestible bullet point explanations.

  • Legal System and Method

    Legal Research

    You will learn legal research techniques with our study guide and become a proficient legal researcher.

  • Jurisprudence and Legal Theory

    Exam-focused

    All essential concepts, principles, and case law are included so that you can answer exam questions quickly.