Phillips v Brooks Ltd 01 May 1919 [1919] 2 KB 243, KBD

A rogue impersonated a reputable person to obtain a ring from a jeweller with a false cheque. The court held the contract was voidable for fraud, not void for mistake, as the jeweller intended to contract with the person physically present.

Facts

A man named North entered the plaintiff’s (Phillips) jewellery shop and selected pearls and a ring. He identified himself as ‘Sir George Bullough’ and provided a corresponding address. The plaintiff verified the name and address in a directory and, believing the representations, allowed North to take the ring in exchange for a cheque. The cheque was subsequently dishonoured as it was fraudulent. North had, in the meantime, pawned the ring to the defendants (Brooks Ltd), who were pawnbrokers acting in good faith without notice of the fraud. The plaintiff sued the defendants for the return of the ring or its value, arguing that the contract with North was void for mistake of identity.

Issues

The central legal issue for the court was to determine the status of the contract between Phillips and the rogue, North. Specifically, was the contract void from the outset (ab initio) due to a unilateral mistake of identity, or was it merely voidable for fraudulent misrepresentation? The resolution of this issue was critical because it determined whether title to the ring had passed to North. If the contract was void, no title would pass, and Phillips could recover the ring. If it was voidable, North acquired a valid (though defeasible) title, which he could pass to an innocent third-party purchaser like Brooks Ltd before the contract was rescinded by Phillips.

Judgment

The judgment was delivered by Horridge J. He held that the contract between Phillips and North was voidable, not void. The court found that despite the fraudulent misrepresentation, the jeweller intended to contract with the person physically present in his shop. The identity of the customer was not a fundamental term of the contract, but rather a matter of his creditworthiness, which was induced by fraud. Horridge J distinguished this face-to-face transaction from cases where parties contracted at a distance, such as through correspondence, like in Cundy v Lindsay. He heavily relied on the American case of Edmunds v Merchants’ Despatch Transportation Co., quoting Morton C.J.:

He [the seller] intended 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.

Applying this reasoning, Horridge J concluded:

I have carefully considered the evidence of the plaintiff, and have come to the conclusion that, although he believed the person to whom he was handing the ring was Sir George Bullough, he in fact contracted to sell and deliver it to the person who came into his shop, and who was not Sir George Bullough … The property therefore passed to the swindler, who was able to give a good title to the defendants before the contract was avoided by the plaintiff.

As a result, because the pawnbrokers (Brooks Ltd) acquired the ring in good faith and for value before Phillips had taken steps to avoid the contract, Brooks Ltd had obtained good title.

Implications

The decision in Phillips v Brooks Ltd established a strong, though not absolute, presumption in English contract law that in face-to-face transactions, a contract is made with the person physically present. Any mistake as to that person’s identity or attributes renders the contract voidable for fraudulent misrepresentation, not void for unilateral mistake. This principle protects innocent third-party purchasers who acquire goods from a fraudster before the original owner rescinds the contract. It places the risk on the original seller who was deceived, rather than on the innocent third party. The case remains a foundational authority on the distinction between void and voidable contracts in the context of mistaken identity.

Verdict: Judgment for the defendants.

Source: Phillips v Brooks Ltd 01 May 1919 [1919] 2 KB 243, KBD