Cundy v Lindsay (1878) 3 App Cas 459
Facts
Blenkarn ordered handkerchiefs from Lindsay using correspondence calculated to suggest that he was the established firm Blenkiron & Co. Lindsay supplied the goods believing it was dealing with that firm. Blenkarn did not pay and sold goods onwards to Cundy, who bought in good faith. Lindsay sought recovery from the subsequent purchaser. The dispute required the court to decide whether the initial correspondence created a contract with Blenkarn, giving him a title capable of transfer, or whether the impersonation prevented any such agreement from arising.
Legal Issue
Did the correspondence form a contract with the rogue despite impersonation of an existing firm, and could the innocent subsequent purchaser obtain title through him?
Held
The House of Lords held that no contract had been concluded between Lindsay and the rogue, Blenkarn. The correspondence was understood as dealing with the established firm whose identity he had impersonated. The sellers did not intend to contract with the unknown person who had actually written the orders.
Blenkarn therefore acquired no contractual title which he could pass to Cundy, despite Cundy's innocence. The result illustrates the potentially harsh allocation of loss between two victims of fraud. It was not a finding that any false name makes an agreement void or that both contracting parties shared a common mistake. The deception concerned the identity of the party to the written transaction and the objective identification of the intended buyer.
⭐ Legal Principle
A written transaction may fail for mistake where the offer is objectively addressed to an identified person whom a rogue impersonates, so that no contract is formed with the rogue. This differs from fraud concerning attributes or creditworthiness, which generally makes a contract voidable rather than non-existent.
Significance
Cundy demonstrates why void and voidable transactions can produce different results for innocent subsequent purchasers. It must be distinguished from face-to-face dealings, where the usual starting point is an intention to contract with the person present. Shogun Finance later revisited written identity and third-party title issues in a divided House of Lords. An exam answer should identify the intended contracting party from the communication and avoid treating every dishonest statement of name or solvency as fundamental identity mistake.
Common exam questions about this case
Who was mistaken and about what?
Lindsay believed the written orders came from a known reputable firm, rather than Blenkarn. The issue was the identity of the intended contracting party. It was not a common mistake shared by seller and rogue, since the rogue knew the deception and sought to exploit the firm's identity.
Why did Cundy’s good faith not alone provide ownership?
On the court's analysis, Blenkarn obtained no title through a contract with Lindsay. He therefore lacked that contractual title to pass onwards. Cundy's innocence did not itself cure the defect. The result differs from a protected transfer made while a fraudulent buyer still holds voidable title.
Does use of a false name invariably mean no contract exists?
No. The communication and intended identity must be analysed. Where parties deal face to face, the usual presumption favours contracting with the person present despite deception. Cundy involved correspondence objectively directed to a specific existing firm. Mistakes about attributes or creditworthiness require a different analysis.