Lewis v Averay [1972]

Court: Court of Appeal

Facts: A rogue, posing as Richard Greene, a well-known actor, approached Lewis to buy a car advertised for £450. The rogue presented a cheque signed "R. A. Greene," which ultimately bounced. After obtaining the car, the rogue sold it to Averay, a third party who bought it in good faith. When Lewis discovered the fraud, he sued Averay for conversion, seeking to recover the car.

Issue: Whether Lewis could recover the car from Averay, who purchased it in good faith, given that the initial transaction involved fraudulent misrepresentation by the rogue.

Held: The claim was dismissed. Averay was not liable for conversion as the property rights had passed to the rogue, and Averay, having bought the car in good faith, was entitled to keep it.

Key Judicial Statements - Lord Denning MR: A unilateral mistake as to identity makes a contract voidable, not void. Once a contract is completed, even if based on a fraudulent misrepresentation, the property rights pass to the rogue. This principle is crucial for protecting innocent third-party purchasers who acquire property in good faith. The focus should be on the outward appearances rather than the subjective intentions of the parties involved. From the perspective of the dealing, Lewis made a contract with the rogue. Despite the fraudulent misrepresentation, the contract was valid, and the title passed to the rogue.

💡 Leveluplaw: This case underscores the principle that a contract, even if entered into under a unilateral mistake about identity, remains valid and enforceable. The property rights pass to the rogue, and third parties who purchase the property in good faith are protected. This decision emphasizes the need for sellers to exercise caution and verify the identities of buyers to avoid facilitating fraud.