Chapter 3 Answer guidance

Question

(a) Lenny, an antiques dealer, is offering a 19th century pewter tankard for sale in his shop for £500. The tankard is worth £150. If it had been made in the 16th century, the tankard would be worth £1500. The tankard is clearly labelled as ‘19th century’. Meldrew, who is short-sighted and has forgotten his glasses, thinks that the label reads ‘16th century’. As he approaches the till, Meldrew says to Lenny, ‘This is great! I only collect 16th century pewter, you know, and this is such a bargain.’ Lenny allows Meldrew to purchase the tankard without correcting him. Advise Meldrew as to his contractual position.

(b) Biddy (a retired solicitor) advertised her car for sale in her local church newsletter, specifying that she would only sell to a practising Christian. The advertisement was answered by a man who claimed to be called Revd Dove, who visited Biddy dressed as a vicar and showed her a driving licence in the name of Revd Dove. Reassured, she agreed to sell the car to him, but required him to sign a written memorandum of agreement, having inserted the names ‘Biddy’ and ‘Revd Dove’ in the blank boxes headed ‘Seller’ and ‘Purchaser’, which also contained a warranty given by the purchaser verifying his identity. The purchaser handed over a cheque and drove off with the car. The cheque was later dishonoured and it transpired that the purchaser was not the real Revd Dove, whose driving licence had been stolen the previous week. The rogue has disappeared, having sold the car to Inez. Advise Biddy.

Answer guidance

(a) Remember you are asked to advise Meldrew as to his contractual position (see chapter 9 for issues about non-disclosure and misrepresentation). There are two main contenders for his contractual position. First, Meldrew might be stuck with a valid contract for the sale and purchase of the (overpriced) 19th century tankard. Secondly, there might be no contract, on the basis that the offer and acceptance did not match (unilateral mistake as to terms), in which case Meldrew could get his money back and return the tankard. Meldrew will have a difficult job to convince the court not to go for the first option. Smith v Hughes tells us that where the seller knows that the purchaser is mistaken as to some quality of the subject matter, the seller can keep quiet and need not correct the purchaser’s mistaken impression. These facts seem in some respects stronger than Smith v Hughes, since the tankard was clearly labelled as 19th century, whereas the age of the oats in the sample was not clearly indicated.

However, the second option might apply if the court accepts that there was a unilateral mistake as to terms. In other words, that Meldrew mistakenly believed that Lenny was promising that the tankard was 16th century and that Lenny knew this:

‘If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms.’

The difficulty here is not understanding the rule (which makes sense in the context of distance sale by sample), but in applying the rule to the facts of a problem like this involving face to face dealings. Did Lenny think Meldrew was mistaken about a promise he was making, or merely mistaken about the age of the tankard? Can we really expect to analyse the unspoken thoughts of non-lawyers in such technical terms?

Finally, notice that Meldrew’s best outcome would be for the court to find that the contract contained a promise by Lenny that the tankard was made in the 16th century, in which case Meldrew could recover damages for breach of that promise, since the tankard is not 16th century and would be much more valuable if the promise was true. This option is highly unlikely, in the absence of an express or implied statement by Lenny that the tankard is 16th century.

(b) Remember you are asked to advise Biddy. She is principally interested in whether she can recover the car from Inez. So it is not worth focusing on the (theoretically) straightforward claim for damages against the rogue for fraudulent misrepresentation etc, since he has disappeared and so in practice is not worth pursuing. Establishing fraudulent misrepresentation does not help Biddy reclaim the car, because it renders a contract merely voidable and it is too late to avoid (also known as ‘rescind’) a contract once a third party has acquired rights in the subject matter, as Inez has done here (see chapter 9 on Misrepresentation). So Biddy’s only hope is to establish that the contract was void (or, more accurately, there never was a contract) because of unilateral mistake as to identity. This boils down to the question: to whom was the offer addressed? These facts reveal the difficulty of applying the current law: did Biddy make an offer to ‘the person in the room’, whom she mistakenly believed to be a Christian, in which case a valid (albeit voidable) contract was formed? Or did she make the offer to ‘Revd Dove’, which could therefore be accepted by no-one other than him? This conclusion would be more realistic if she had had previous written dealings with the real Revd Dove, but there is no suggestion of that on the facts. If you are inclined to opt for the first of the options, what difference (if any) does it, and should it, make that Biddy and the rogue signed a written memorandum evidencing their oral agreement, following the majority decision in Shogun Finance?