Legal Principles and Key Points
- In the case of Cundy v Lindsay  3 App Cas, the court held that a contract is void when the identity of the person contracted with is mistaken.
- This contract case concerns mistakes, mistaken identities and rescission.
Facts of the Case
- A third party committed fraud against C by ordering loads of handkerchiefs to C without paying. In total, this added up to 250 dozen cambric handkerchiefs prior to discovering these were fraudulent transactions.
- D, the company name which the third party used to make the transactions, attempted to recover some handkerchiefs from C in this appeal.
- Whether the contract was legitimate.
- Whether there was a common mistake.
Held by House of Lords
- Appeal dismissed – contract was void and there was an operable mistake.
- C is innocent and had to return the handkerchiefs due to the acts of the third party.
- “How is it possible to imagine that in that state of things any contract could have arisen between the Respondents and Blenkarn, the dishonest man? Of him, they knew nothing, and of him they never thought. With him they never intended to deal. Their minds never for an instant of time rested upon him, and as between him and them there was no consensus of mind which could lead to any agreement or any contract whatever.”
Did a contract exist between the parties?
- The judge relied on Hardman v Booth  1 H & C 803 to similarly hold that there is no real contract in place.
- “No contract was ever intended between the vendors of the goods and the person who had professed to purchase the goods as the agent of that firm; and the consequence was that there was no contract at all. There, as here, an innocent person purchasing the goods from the person with whom there was no contract was obliged to submit to the loss.”
- This case represents an exceptional and unusual circumstance where both innocent parties make a mistake – as a result of a fraudulent third party individual – thus rendering a contract void.