Judgments - Shogun Finance Limited (Respondents) v Hudson (FC) Appellant

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    185.  The principle to be applied in the case of face to face negotiations has sometimes been treated as an exception, but to my mind it is the best starting-point, as it exemplifies the simplest form of oral contract. The principle was first spelled out in England in Phillips v Brooks Ltd, following the Chief Justice of Massachusetts in Edmunds v Merchants' Despatch Transportation Company (1883) 135 Mass 283,

    "The fact that the seller was induced to sell by fraud of the buyer made the sale voidable, but not void. He could not have supposed that he was selling to any other person; his intention was to sell to the person present, and identified by sight and hearing; it does not defeat the sale because the buyer assumed a false name, or practised any other deceit to induce the vendor to sell".

    The only case out of line with the principle is Ingram v Little. The reasoning in Devlin LJ's powerful dissenting judgment is in my view unanswerable. I consider that Ingram v Little was wrongly decided.

    186.  My noble and learned friends Lord Nicholls of Birkenhead and Lord Millett accept the face to face principle but consider that it should not be limited to situations where the parties have negotiated face to face. Lord Millett also takes the view that the principle should not be regarded as a mere presumption, but as a rule of law (subject, as I understand it, to an exception in cases of agency, such as Hardman v Booth (1863) 1 H & C 803, which may be the best explanation of the difficult case of Lake v Simmons [1927] AC 487: see Sir Jack Beatson's 28th (2002) edition of Anson's Law of Contract pages 330-1, which contain an illuminating discussion).

    187.  If the principle is no more than a presumption, it is a strong presumption, and exceptions to it would be rare (in Ingram v Little Devlin LJ himself, at p 67, was content to leave this point open). I would hesitate to state it as an inflexible rule (apart from cases of agency) because the notion of one individual impersonating another covers a wide range of factual situations (broadly corresponding to the wide range of meaning conveyed by saying that one person knows, or knows of, another). At one end of the spectrum is the confidence trickster who falsely but convincingly asserts that he is a baronet (or a barrister, or a brain surgeon) in order to inspire confidence and obtain credit. Then there are cases like Phillips v Brooks Ltd and Ingram v Little, where the rogue falsely gives the name and address of a real person whose existence the other party can and does check (but whom the other party does not actually know by sight, or the deception would fail). The most audacious form of impersonation would be where a rogue (such as the Tichborne claimant was held to be) attempts, face to face, to deceive a member of the family of which he claims to be part, or someone else personally acquainted with the individual whom the rogue is impersonating. Impersonation of that sort must be very rare indeed, and probably limited to deception of those whose senses are impaired (as Isaac was when, according to Chapter 27 of Genesis, Jacob successfully impersonated his elder twin brother Esau). I would not exclude the possibility that impersonation of that sort might be outside the presumption. Your Lordships were shown the decision of the Court of Appeals of New York in Morgan Munitions Supply Company v Studebaker Corporation (1919) 123 NE 146, where one brother impersonated his more distinguished brother in order to obtain a contract of employment; but it appears (so far as can be discerned from the report) that the contract was in writing, and that neither brother was personally known to the employer.

    188.  I return to the question, which is of central importance to this appeal, whether (as Lord Nicholls and Lord Millett propose) the face to face principle should be applied much more generally. It may be that it should apply to an oral contract alleged to have been made on the telephone, where the parties are identified by hearing, although not by sight. An alleged oral contract made by telephone might be a case where the presumption applied, but was rebuttable. But to extend the principle to cases where the only contract was by written communication sent by post or by e-mail would be going far beyond identification by sight and hearing. Where there is an alleged contract reached by correspondence, offer and acceptance must be found, if they are to be found at all, in the terms of the documents. Devlin LJ put it simply and clearly in Ingram v Little at page 64:

    "The classic case of Cundy v Lindsay was one in which the acceptance was not addressed to the offeror. The offer, as in the instant case, was addressed to a person who held himself out as willing to do business. But the offer was made by Blenkarn and the acceptance addressed to Blenkiron. The fact that there was a real Blenkiron, whom Blenkarn was pretending to be, showed that it was not a case of falsa demonstratio non nocet".

    There was in that case the appearance of a complete contract only because the rogue, Blenkarn, had forged the signature of Blenkiron & Co. (Lord Cairns said at p 465 "just in the same way as if he had forged the signature"; but the facts as set out in the report appear to amount to nothing less than forgery.) The documentary evidence provided no ground for concluding that the manufacturer (Lindsay & Co.) intended to contract with anyone other than Blenkiron & Co. as addressee of the manufacturer's acceptance.

    189.  King's Norton Metal Company Ltd. v Edridge, Merrett & Co Ltd (1897) 14 TLR 98 went the other way because there was no ground for concluding that the manufacturer's offer was made to anyone other than Wallis, trading as Hallam & Co. Wallis, trading as Hallam & Co., had previously placed at least one order with the manufacturer, and had paid with a cheque drawn by "Hallam & Co.". The judge at first instance described the case as a long firm fraud. So in that case there was no question of the manufacturer being deceived into thinking he was dealing with someone else. The deceit was as to the standing and credit- worthiness of Wallis, who had embellished his writing paper with deceptive material.

    190.  In Cundy v Lindsay Blenkiron & Co., the firm whose name was misappropriated by the rogue, was described by the Lord Chancellor as "a well known and solvent house". The implication is that Lindsay & Co, the manufacturer, would have known of its existence, although that was not a question explicitly put to the jury. What if Lindsay & Co. had never heard of Blenkiron & Co? One answer to that question is that the sequence of events would probably have been different, since Lindsay & Co. would have been put on enquiry as to what to make of the rogue's deceptive signature, and would probably have acted more cautiously before despatching such a large quantity of goods. There would have been more room for argument about who was the real addressee of the manufacturer's offer. The Latin maxim referred to by Devlin LJ in Ingram v Little means in its full form that misdescription is not fatal when the real subject-matter is common ground. These last words are important. Whether the real subject is common ground depends on all the circumstances, and the old textbooks are full of illustrations, some going one way and some the other (see for instance Jarman on Wills, 8th edition (1951) volume 2, pages 1246 ff). The modern approach to construction of documents is much less regimented by detailed rules, but the essential issue remains the same.

    191.  However, the present appeal is, as my noble and learned friend Lord Hobhouse has demonstrated, easier to resolve. Shogun Finance had no doubt never heard of the real Mr Patel before the day on which the written contract was signed by the rogue, forging Mr Patel's signature. But by the time it accepted the written offer it had, by efficient information technology, confirmed that Mr Patel existed and had learned a good deal of relevant information about him, including his creditworthiness. The form of contract made quite clear that Shogun Finance's intention was to accept an offer made by the real Mr Patel, and no one else. The appellant's attempt to analyse the matter as a face to face contract (effected through the agency of the car salesman) was accepted by Sedley LJ but in my view it must fail, for the reasons stated by Lord Hobhouse. The appellant relied on the decision of this House in Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552, but in my view it is against him: see especially the remarks of Lord Upjohn at page 578.

    192.  In the course of argument some time was spent on the decision of the Court of Appeal in Hector v Lyons (1988) 58 P & CR 156. In that case a man was negotiating to buy a house and had discussions, both on the telephone and face to face, with the seller. He then instructed solicitors to act on the basis that his son (who was under full age and shared three of his father's four names) was to be the purchaser of the house, and the solicitors apparently agreed to proceed on that basis. The father signed the contract, although not with his normal signature. The Court of Appeal upheld the deputy judge's refusal of the father's claim for specific performance. That result can readily be supported, if only on the "clean hands" principle. But the reasoning in the case is difficult, very largely because the facts are not only unusual but also obscure. The father gave evidence most of which was rejected as false, and the solicitors instructed by the father did not give evidence. But I am of the clear opinion that the decision does not assist the appellant in this case. So far as material, it confirms that the principle as to face to face negotiations does not apply to a written contract identifying the parties (as was requisite in a contract for the sale of land both before and after the coming into force of the Law of Property (Miscellaneous Provisions) Act 1989).

    

 
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