Question on Mistake:

Charlatan, posing as Dizzy, a well-known pop star, calls upon Ernie and offers to
buy his car which was advertised for sale at 30,000 pounds. As a false proof of his
identity, Charlatan shows Ernie a pass which entitles the bearer to back stage
entry at an upcoming Dizzy concert. In addition, Ernie has a quick view of an old
photo of Dizzy on his website. Ernie allows the car to be taken away by Charlatan.
The cheque had been stolen and was worthless. Charlatan, pretending to be
Ernie, sells the car to Fay and hands over the car registration documents to her.

Advise Ernie.

Answer:
The question abovementioned is regarding law of mistake in particular it is a unilateral mistake.
There are two types of mistakes that may render a contract void Common or mutual mistake
and Unilateral mistake. In common mistakes both parties are mistaken but to a different point
and in mutual mistake both parties share same bilateral mistake. In unilateral mistakes one
party only is mistaken. Generally, relief is provided to those who are under bilateral mistake but
exceptions are present. We have to discuss unilateral mistake because the question is related
that. There are three forms of unilateral mistakes. First is latent ambiguity in the terms of offer
and acceptance, then we have mistake as to the terms of the offer, and last and most important
one is mistake as to identity of the other contracting party. The question is specifically
regarding mistake as to the identity of the other contracting parties. We will discuss the
scenario with the help of case laws which will help us in knowing whether this mistake should
rendered void or the contract would remain valid.

Ernie had placed advertisement to sell his car for 30,000. Charlatan after looking at the
advertisement calls upon Ernie to buy his car at the asked rate. Charlatan posed himself as Dizzy
a famous pop-star. To assure and deceive Ernie He shows a pass which was entitles the bearer
to back stage entry at an upcoming Dizzy concert. There are two assumptions in mistake as to
identity of the other contracting party. One is where parties dealt with each other face to face,
there is a strong presumption that they wanted to deal with each other. Another presumption
is that when parties dealt with each other in writing then the one who is innocent aka the first
party would be given a benefit of doubt because he had not the ample opportunity to recognise
the rogue who is pretending to be someone else. Parole rule will be applied because the
innocent party would be able to prove that he wanted a contract with some particular person
but later on turned out it was rogue who pretended to be someone else and deceived him. In
the written contracts, first paper’s title would be never transferred whereas dealing face to face
can transfer his title. We will discuss this further relating with our scenario.

We have this landmark case of Shogun Finance v Hudson, of House of Lords. Before this case
there was uncertainty related to the doctrine of mistake as to identity. Shogun Finances v
Hudson, a rogue entered into a written contract to purchase a vehicle on credit. In the written
contracts identity of the party is critical hence the contract was rendered void. The majority
judgment said that a presumption in face to face cases are that the vendor wanted to deal with
the person before him. Whenever a rogue pretend to be someone else in front of an innocent
vendor and offers to purchase a good and vendor is deceived and sells the goods and rogue will
usually gives the unworthy cheque same cheque is given in our case as well. Courts usually sees
one thing either the contract is good or not if the contract was good and face to face then
chances are high that vendor will bear the consequences and loss and third party will get away
with it because when the contract is good that means title was transferred to rogue and
eventually to the third party.

We can see in our case Ernie had the opportunity to recognise him when he was showing Ernie
a pass in addition to it, Ernie checked an old picture of Dizzy on his website that can give rise to
the assumption. We have the minority judgment of Lord Nicholls and Lord Millet in Shogun
Finance v Hudson, where they said “law should not depend on the precise mode of
communication of offer and acceptance.” However, in written contracts sometimes it looks like
that vendor wanted to contract with whoever placed the order with them. The presumption of
face to face was doubted in the past cases Philips v Brooks and Lewis v Averay but the majority
accepted the presumption in Shogun Finacnes.

In conclusion, we can say that it looked like Ernie wanted to enter into a contract with Charlete
who was before him. Fay who is the innocent third party would receive the transfer of the car
from Charlatan because the title was transferred to Charlatan from Ernie. In the cases of
mistake as to identity both parties are innocent but one has to bear the consequences it will
depend on the scenario and assumptions. If it is face to face contract chances are high that
vender would borne the loss and in written contracts third party would borne the loss. In last, it
depends on the court whether they wanted to void a contract or let it remain valid.