Identity of offeror and offeree
Video titled: Video 6.1

Transcript Area

So, chapter six is about the identity of the offerorand offeree, the identity of the parties to the contract. Which I think is really an issue about contract formation. But I'm sure some of you will be coming to the material in this chapter in the context of the broader topic of mistake. But I think that it is useful to think of this in terms of contract formation, because fundamentally it seems to me a crucial issue in these cases is where, O makes an offer to A, whether B can accept that offer. And the general rule is well, no. So, if O, the offeror makes an offer to A and to A alone then B can't accept that. And that's often the case when we're looking at contracts concluded in writing by parties at a distance. So,Cundy v Lindsay, Shogun Finance Ltd v Hudson, but of course those cases can sometimes be distinguished such as in Kings Norton v Eldridge. Or, in other situations, the offeror makes the offer to basically everyone. Such that, anybody could accept it. And that will often be the case where contracts are concluded face-to-face, let's say in a shop where the offeror just doesn't really care about the identity of the person in their shop. I think it's useful to have an idea from the outset about why thismatters. And it matters because, let's say R, who's often a rogue, might sell the goods on very quickly. Let's say we're talking about the sale of a car. O will contract with R. R will sell the car on to a third party. And let's say this third-party is a bona fide purchaser for value without notice. Then in this happy example of the first slide is the valid contract between O and R. So, R gets good title to the car, R can sell the car on to the bona fide purchaser. It's harder if the contract between O and R is void, or no contract comes into existence. Because, let's say, there's been a mistake of identity. Well then because there's no contracts, or a void contract between O and R, R does not get good title to the car. Which means that even though the bona fide purchaser has paid money and doesn't know of any problems in the head contract, because R had no title to the car, R can't give title to the bona fide purchaser. Because of this Latin Maxim, nemo dat quod non habet. So, R cannot give what R does not have, and because the bona fide purchaser does not have title to the car, O can sue the BFP in the torts of conversion. O's original property rights trump the fact that bona fide purchaser has acted in good faith and paid money. That's obviously a very tough result on the bona fide purchaser, but English Law protects the original owner’s property rights very strongly. Now the much more difficult situation I think is where the contract is voidable, as between O and R. So, let's say that the mistake isn't one of identity, but one of attributes. So, R has made a fraudulent misrepresentation about who R is. So, the contract will be voidable for misrepresentation and we'll look at misrepresentation in more detail in chapter sixteen. But if that contract is voidable, it means it is not void unless and until O rescinds that contract. So, the contract is valid as between O and R and unless and until O rescinds the contract. Which means if R sells the car on to the bona fide purchaser before O rescinds the contract, then R will have had title to the car under the voidable contract and can give title to the bona fide purchaser. But if O rescinds the contract before R sells it on to the bona fide purchaser, then because the contracts been rescinded, it is now void. It's as if it was of no effect, which means that R does not have title to the car. So, when R later tries to sell it on to the bona fide purchaser, R won’t have titled to give, because of the nemo dat rule and O will be able to sue the bona fide purchaser in conversion. So, it's in the three party situations that the rules in this chapter matter the most, I think.