L decided to sell car. R gave L a cheque and wanted car right then. L wanted to wait for cheque to clear. R convinced L he was a famous actor. L let R have car. Cheque bounced. R had already sold to A in good faith
What is the effect of a mistake by one party as to identity of the other?
When two parties have come to a contract – or rather on the face appears to be a contract – the fact that one party is mistaken as to the identity of the other does not mean that there is no contract, or that the contract is VOID from the beginning.
**It does mean the contract is VOIDABLE – liable to be set aside as the instance of the mistaken person, so long as he does so before 3rd parties have in good faith acquired rights under it.
The contract is not void but is voidable
**It is wrong that innocent purchaser had to bear the burden
**There is a competition between two people – L and A, and they are both innocent parties
***The original seller is the one who started it all off by giving it to R – L had the ability to prevent this from happening – so we favour the innocent purchaser A
Voidable means the contract can be made void – and if L had made it void before R sold it to A, then the title never would have passed to A
It was still a good contract under which good title can pass – the contract was voidable, but not after sold to a 3rd party in good faith.