Cundy v Lindsay [1878] 3 App Cas 459 Case Summary

KEY POINTS

Since the claimant's intention was to sell the handkerchiefs to Blenkiron & Co., not Blenkarn, there was no agreement or consent from the claimant for a contract with Blenkarn.
Consequently, no valid contract was formed between the claimant and Blenkarn, which means that Blenkarn could not transfer the rightful title of the goods to the defendants.
As a result, the claimant retained ownership of the goods. Therefore, the defendants, who possessed the goods without proper ownership rights, were found liable for conversion.

The dispute arose from a fraudulent scheme orchestrated by an individual named Blenkarn. Lindsay & Co. received correspondence from Blenkarn, who falsely represented himself as 'Blenkiron & Co.,' a reputable business located at 123 Wood Street, Cheapside. In reality, Blenkarn had rented a room at 37 Wood Street, Cheapside, and was not associated with the genuine Blenkiron & Co.
Unaware of the fraud, Lindsay & Co. believed the correspondence to be from the legitimate Blenkiron & Co. and delivered a substantial order of 250 dozen linen handkerchiefs to Blenkarn. Blenkarn, in turn, sold the goods to an innocent third party, Cundy. When Blenkarn failed to fulfil the payment, Lindsay & Co. initiated legal proceedings against Cundy to recover the value of the handkerchiefs.

The case raised important legal questions concerning the impact of fraudulent misrepresentation on contract formation, particularly when the mistake relates to the identity of the contracting party. The court's decision established significant principles in contract law, particularly in cases involving mutual mistake and misrepresentation.

X fraudulently obtained goods from Plaintiff by writing to him and pretending to represent a respectable company and, not paying, he resold the goods to Defendant who bought in good faith. (NB unlike Phillips below, X never met Plaintiff face-to-face).
HL held that since no contract had ever been made between Plaintiff and X, the goods were to return to Plaintiff, regardless of Defendant’s innocence.

If A buys goods from B who has no title himself to the goods, A will have a right to them against all EXCEPT the actual owner.
However, if the seller obtained the chattel by a de facto contract (i.e. a contract that purports to pass ownership from owner to seller) the new BF purchaser has a good title. In this case there was no contract because X misled Plaintiff as to the identity of the party to whom he was selling.
He places great emphasis on the fact that X is a “dishonest fraudster” and the party he was impersonating was a reputable company.
- IS this relevant? Would the decision be changed if X had been impersonating a company as disreputable as himself or if, in fact, he had been as reputable as the company he was impersonating e.g. by innocently inducing them to mistake his identity i.e. is “fault” or “blameworthiness” relevant or is it merely factual mistake?

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