| Citation | [1919] 2 KB 243 |
| Date of Judgment | 1st May, 1919 |
| Court | Kings Bench (K.B) |
| Case Type | Criminal Appeal No.91 of 2002 |
| Appellant | Phillips |
| Respondent | Brook Ltd. |
| Bench | Sir Horridge J |
| Referred | Sec 17- Fraudulent Contracts: 18- Misrepresentation: 19Voidability of Agreements Without Free Consent: 20-Agreement Void where Consideration and Object Unlawful of Indian Contract Act,1872 |
FACTS OF THE CASE
On 15 April 1918, a man named North entered Phillips jewelry shop and said, “I am Sir George Bullough“. He wrote a dud cheque for £3000 to pay for some pearls and a ring. He said he lived in St. James’s Square. Phillips checked the phone directory and found there was someone there by that name. He asked if he would like to take the item bought with him, where the (North) imposter said he would leave the pearls but take the ring ‘for his wife’s birthday tomorrow’. The imposter (North) then pawned the ring to Brooks Ltd for £350. When the false cheque was dishonored, Phillips sued Brooks Ltd to get the ring back.
Note that conflicting reports are showing that Mr. North identified himself after the ring was sold, as Viscount Haldane said in Lake v Simmons, but others say that North identified himself straight away.
`ISSUES:
- The claimant sued the defendant, seeking the return of the ring. The claimant argued that the contract with the imposter was void due to a mistake.
- He contended that had he known the true identity of the man, he wouldn’t have sold the ring, and thus, the contract was void.
ARGUMENTS
On The Behalf of Plaintiff (Claimant)
- Mistake of Identity: The plaintiff could argue that they made a fundamental mistake regarding the identity of the person they were dealing with. They believed they were conducting a transaction with Sir George Bullough, a reputable individual. This mistake violated their consent and rendered the contract void.
- Unjust Enrichment: The plaintiff might argue that the defendant should not be allowed to benefit from the fraudulent transaction. The defendant received the ring without providing valid consideration, and it would be unjust for them to retain the property.
- Voidable Contract: The plaintiff might argue that even if the contract is not void ab initio (from the beginning), it should be considered voidable due to the misrepresentation. As such, the plaintiff should have the option to rescind the contract and seek restitution.
- Lack of Genuine Consent: The plaintiff could contend that they entered into the contract with the imposter under pretenses. Had they known the true identity and intentions of the imposter, they would not have agreed to the sale. Therefore, their consent to the contract was not genuine, making it voidable
- No Intention to Transfer Ownership: The plaintiff could argue that they never intended to transfer ownership of the ring to the imposter. They intended to sell the ring to the actual Sir George Bullough, not to someone impersonating him. Therefore, there was no valid transfer of ownership, and the ring still rightfully belongs to the plaintiff.
On The Behalf of Defendant (Respondent)
- Innocent Acquisition: The defendant may contend that they did not know about any fraudulent activities on the part of the imposter. They acted in good faith and without any intent to engage in wrongful conduct. They should not be held responsible for the imposter’s actions.
- Transfer of Property and Ownership: The defendant could assert that they acquired legal ownership of the ring through a valid purchase. They paid value for the ring and did not know about any prior irregularities. As the legal owner, they have a rightful claim to the property.
- Bona Fide Purchaser for Value: The defendant can argue that they purchased the ring in good faith and for value from the imposter. At the time of purchase, they had no reason to suspect any wrongdoing, as they believed they were dealing with a legitimate seller. They should not be penalized for the imposter’s deceit.
- Property Rights and Finality of Transactions: The defendant could emphasize the importance of respecting property rights and the finality of transactions. Allowing the plaintiff to reclaim the ring after it has been legitimately acquired by the defendant would undermine the stability and integrity of commercial transactions.
JUDGEMENT
The judge looked at the facts and listened to what the person who lost the ring (the plaintiff) had to say. The only harm mentioned was that a valuable ring was taken. The judge said the person who lost the ring (the plaintiff) originally meant to sell it to a different person named North, who came into the shop pretending to be someone important (Sir George Bullough). The judge mentioned a similar case, (Edmunds v. Merchants’ Despatch Transportation Co) and explained his view of the law.
The judge made two important points:
- If someone tricks/pretends to be a reliable trader in a specific place and buys things in person from someone else, then the things belong to the trickster (may be forwarded to a third party).
- But, if someone is buying things in person on behalf of a relative of a reliable trader in a specific city, the things don’t belong to the buyer.
The judge observed that although he believed the person to whom he was handing the ring was Sir George Bullough, he contracted to sell and deliver it to the person who came into his shop.
In the Words of Horridge J, the case refers to –
“The minds of the parties should meet and agree upon all the terms of the sale, the thing sold, the price and time of payment, the person selling and the person buying. 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; he 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 practiced any other deceit to induce the vendor to sell.”
Overall, the responsibility is to check the validity/reliability of the purchaser.
The judge said that in this case, the ring now belongs to the person who bought it (Brooks Ltd.) buyer, even though the buyer pretended to be someone else. The judge also said that although the original contract was based on a lie, it can still be canceled, but the property can still be passed to an innocent third party.
So, in the end, the defendant (Brooks Ltd.) legally owns the ring.
REFERENCES
This Article is written by Riyansh Gupta of the University Institute of Legal Studies, an Intern at Legal Vidhiya.
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