Shogan Finance v Hudson [2003] 3 WLR 1371  House of Lords

A rogue purchased a car on HP terms from a car dealer. He had produced a false driving licence in the name of Durlabh Patel. The car dealer faxed the driving licence to the claimant finance company and phoned through the details on the application form. The claimant then did a credit search on Durlabh Patel and then told the dealer to let the rogue have the car. The Rogue paid 10% deposit and drove off with the car. He then sold it on to the defendant and reneged on the finance agreement. The claimant brought an action against the defendant claiming to be the owner of the car as the contract was void for mistake.

Held: 3:2 The contract was void for mistake. The contract concluded between the finance company and the rogue was made inter absentes. The identity of the person was crucial to the contract as that it was Durlabh Patel that the credit check was carried out on and the claimant would not have allowed the car to go without the credit check. The two dissenting judges were highly critical of the result. Lord Millet and Lord Nicholls were of the opinion that there should be no distinction between contracts made inter absentes and contracts inter praesentes and that Cundy v Linsey should be overruled.

Back to lecture outline on Mistake.