Lewis v Averay [1972] 1 QB 198

Facts

• Mr. Lewis, seeking to sell his car, entered into a transaction with an individual who falsely claimed to be Richard Greene, a well-known actor.
• The rogue presented a seemingly authentic Pinewood Studios pass with his photograph and the name "Richard Greene" to support his identity.
• Mr. Lewis accepted a cheque as payment from the rogue and allowed him to take possession of the car.
• The rogue sold the car to Mr. Averay, an innocent third party, for £200.
• Mr. Lewis discovered the fraud when the cheque was dishonoured and brought legal action against Mr. Averay, asserting that due to mistaken identity, the contract with the rogue was void and the car remained his property.

Issues

1. Whether a contract formed under a unilateral mistake as to the identity of the contracting party is void or merely voidable in a face-to-face transaction.
2. Whether the passage of property to a bona fide purchaser for value without notice of the fraud is valid if the initial contract was induced by identity fraud.

Decision

• The Court of Appeal held that the contract between Mr. Lewis and the rogue was voidable for fraud, not void.
• The right to rescind the contract was lost once the rogue sold the car to Mr. Averay, a bona fide purchaser for value without notice of the fraud.
• The outward appearance of the transaction indicated Mr. Lewis intended to contract with the person present, regardless of the stated identity.
• Mr. Averay, as an innocent purchaser, obtained good title to the car.

Legal Principles

• In face-to-face contracts, there is a presumption that parties intend to contract with the individual physically present, even if their identity is assumed.
• A contract induced by fraud as to identity is generally voidable, not void, in face-to-face dealings.
• Title can pass to a bona fide purchaser when a contract is voidable but has not been rescinded at the time of sale.
• This principle contrasts with the approach in written contracts, where a mistake as to identity can render a contract void, as later established in Shogun Finance v Hudson [2003] UKHL 62.
• Precedent such as Cundy v Lindsay illustrates that, in certain circumstances, a mistake as to identity may negate consent, rendering contracts void ab initio.

Conclusion

Lewis v Averay established that, in face-to-face transactions, contracts entered into under a mistaken identity are voidable rather than void, protecting bona fide purchasers while balancing against the risks of fraud. This approach was subsequently limited by later authority distinguishing written contracts.