This article has been Written by ELAVARASI. P from THE TAMIL NADU Dr. AMBEDKAR LAW UNIVERSITY

CASE NAME : KINGS NORTON METAL V ELDRIDGE MERRETT AND CO.

CASE CITATION : (1897) 14 TLR 98

DATE OF JUDGMENT DELIVERED : November 18, 1897.

COURTS INVOLVED : Court of Appeal

PARTIES INVOLVED : Eldridge Merrett, Kings Norton Metal , Wallis.

JUDGES INVOLVED : Lord Chief Justice Russell.

INTRODUCTION :

This case King’s Norton Metal co v Edridge Merrett & co was a English contract law case in which the judgement was delivered in November 18, 1897 by Lord Chief Justice Russell. This case mainly talks about the mistake to the identity and misrepresentation in the identity. The unilateral mistake was also involved in this case. Both mistake and misrepresentation are two different concepts that are very much important to know. Moreover this law of mistake has a separate part in the English contract law. When the mistake is made very grave then the contract made between the parties shall become void. There also certain types of mistake present in the English contract law. In this article let’s talk about the concepts involved in the case of king’s Norton Metal co v Edridge Merrett & co by analysing the facts, issues and judgment provided in that case law.

OVERALL CONCEPTS INVOLVED IN THIS CASE :

Mistake in English contract law means a wrongful understanding by 1 or more parties that are involved in the contract. These mistakes are of three types :

1. Unilateral mistake : A contract must have 2 parties one who offers and one who accepts. If anyone of the party makes the mistake in the identification of another party then the contract shall be made void.
2. Mutual mistake : A Mutual mistake is a mistake which is made by both the parties of the contract. Both of them would have made thought of contracting something different. The best exemplary case law for mutual mistake is Raffles v Wichelhaus.
3. Common Mistake : Both the parties to the contract would have believed in the same mistake of facts. If the mistake made by them is fundamental to the contract then the contract would become void. The best case law for common mistake is Bell v Lever Brothers. In this case the court stated that common mistake in a contract between parties can be made void only if the fundamental subject matter is mistaken, if not then it shall not be made void.

For example :

If the contract between A and B are made void due to a unilateral mistake and in this case B has already transferred the goods that he obtained from A to C then C must return the good that belonged to A because there is no contract between A and B so title of goods can’t be transferred to B and to C. If the contract between A and B were made Voidable then C has the right to possess that goods as he obtained them with good faith.

FACTS OF THE CASE :

Kings Norton Metal company was a metal manufacturer. They received an order through a letter from the person named Wallis who gave a false image as a rich man who holds numerous agencies and factories. The metal manufacturers actually thought that Wallis was a real wealthy businessman who was associated with Hallum and company where the office is present in Belfast Lile and Ghent. Wallis clearly fabricated that Hallum and company was a very famous company but in fact there is no such company. The metal manufacturers accepted the order that was placed by Wallace without any initial payment for the goods. After the delivery of the goods Wallis, the fraudster sold the goods to a 3rd party named Eldridge Merrett without paying to Kings Norton Metal company. He then disappeared and was not found anywhere. Here the third party, Eldridge Merrett bought goods in a good faith and unknown of the fraudulent act committed by Wallis.

The Kings Norton Metal company sued Eldridge Merrett to return the good that belonged to them under tort of conversion. In this case if a person wants to claim under the tort of conversion then he must prove that the contract that was initially made was void under unilateral mistake.

CONTENTIONS RAISED BY BOTH THE PARTIES :

Kings Norton Metal :

Kings Norton Metal as the claimant wanted back their goods that were sold to the third party, Eldridge Merrett . They stated that the contract between Kings Norton Metal and Wallis was void. They also stated that the contract was made due to unilateral mistake believing that Wallis was a rich businessman and was associated with Hallum and company which does not even exist. They also stated that Wallis fraudulently misrepresented as a rich person to obtain the goods from them.

Eldridge Merrett

Eldridge Merrett as a innocent third party who don’t even know the mischievous acts done by Wallis, obtained the goods from him. He purchased those goods from Wallis with a good faith and with honest intention. Thus he doesn’t want to give back the goods which could make economic loss to him. They also stated that it is a Voidable contract for and the possession of goods will remain with himself.

ISSUES RAISED IN THIS CASE :

The basic issues raised in this case are to know whether there is a contract between both the parties and if the contract is void or Voidable.

1. Whether the contract between Wallis and Kings Norton Metal was valid?
2. Whether the contract between Wallis and Kings Norton Metal was void under unilateral mistake?
3. Whether Eldridge Merrett was liable to return the goods to Kings Norton Metal ?

JUDGMENT GIVEN IN THIS CASE LAW :

The court gave the judgement in favour of Eldridge Merrett. The court held that Wallis has not used another identity while selling goods to Eldridge Merrett. He delivered goods in his own capacity and identity. He does not use another fake identity to sell that goods to Eldridge Merrett. Also he doesn’t make any deception in the fundamental factors of the contract. The court held that the contract between Wallis and Kings Norton Metal was Voidable and states that the title possessed by the fraudster shall be transferred to Eldridge Merrett who bought the goods with good faith. Thus the Kings Norton Metal shall not recover the goods that were already transferred to Eldridge Merrett.

Unlike in other cases where a person would misrepresent himself as another who is already well known by the party to the contract and fraudulently enters into the contract, this case is a bit different. In this case Wallis mention himself as a rich person associated with a company who is unknown to Kings Norton Metal . Wallis exaggerated himself as a richest person which comes within the scope of mere lying.

The court of Appeal held that the Kings Norton Metal wanted to enter into the contract with the person mentioned in the letter, who is rich and is associated with Hallum and company. Thus they intend to enter into the contract with him. So, this contract between them shall be considered as voidable. Hence it became voidable, the goods delivered by Wallis to Eldridge Merrett is also valid and the Kings Norton Metal cannot recover their goods from Eldridge Merrett and the goods shall remain within the possession of Eldridge Merrett . This the contract is held voidable for misrepresentation and not mistake.

PRINCIPLES INVOLVED IN THIS CASE :

The principles that are involved in this case are ;

• Unilateral mistake as of identity when a contract is made face to face by the parties shall make the contract voidable and not void.
• To make a contract void as of mistake to identity, it is important to know that while contracting with the parties the identity of the parties must have crucial importance. If it was merely a lying or exaggeration in the parties identity which is not important subject matter then the contract made shall not be void.
• This case comes under misrepresentation and not mistake.
• Thus in this case it is stated that the contract between the parties are voidable and not void.
• Since the contract is voidable the third party can have the possession over the goods that he bought with good faith, while the claimant can’t have the goods that he delivered back to him.

RELEVANT CASE LAWS :

The case laws that are relevant to King’s Norton Metal co v Edridge Merrett & co are Cundy v Lindsay, Lewis v Averay, Shogun Finance Ltd v Hudson and so on.

Case name : Lewis v Averay

Case Citation : [1971] 3 All ER 907

Facts of the case :

In this case , the person named Lewis wanted to sell his car and advertised about it. A fraudster pretended himself to be a famous actor and asked Lewis to sell his car to himself. Lewis accepted to sell the car and the fraudster gave a cheque worth car’s value. The fraudster then sold the car to another person named Averay. Lewis noted that the cheque given by fraudster was rejected. Lewis found the car which was in the possession of Averay and sued him to give back his car.

Issues raised in this case :

1. Whether Lewis can claim back his car through tort of conversion?

Judgment made in this case :

In lower court the claim by Lewis was allowed. But in Appeal Lewis claim on his car from Averay was dismissed. The court held that the contract between Lewis and the fraudster is a valid contract and the innocent party Averay who got the possession of the car in good faith shall have the property with himself.

Principles used :

In the above case Lewis v Averay, Lord Denning stated his points as, when there is a unilateral mistake as of the identity of the parties involved in a contract the contract will become voidable and not void. He explained it as When the party’s to the contract enters into your contract face to face which in fact one party to the contract has mistaken the identity of the other party does not mean that there is no contract between them and it shall not become null and void. In these cases the contract will become Voidable, and the 3rd party who brought the goods from the mistaken person in a good faith shall have the rights over that property.

He also stated that in this case the burden of the proof of who owned the car must be proved by Lewis and not the innocent third party.

CONCLUSION :

In conclusion this case King’s Norton Metal co v Edridge Merrett & co states about the mistake of identity and misrepresentation. It gives a clear view on when a contract can be made void and when it can be made voidable. Thus by this English case la, we can know the importance of mistake in contract law. It is evident from both the case laws that the party to the contract is mistaken the identity of another party which has no crucial importance and the contract is made with that certain person then the contract will not be void. Only when the subject matter that is important to the contract or the identity of the person to the contract has a crucial importance then the contract shall be made void. If a contract is made void the third part who got the property have to return it to original owner and if the contract is voidable then the third party has no reason to return back the property because the title was already passed to him.

REFERENCE :

King’s Norton Metal Co v Edridge, available at https://www.lawteacher.net/cases/ kings-norton-metal-v-edridge.php , (last visited on December 31, 2023).

King’s Norton Metal Co v Edridge Merrett & Co , available at https://www.studocu .com/ row/document/university-of-ghana/law-of-contract/king-norton-metal-company /64065916 , (last visited on December31, 2023)

Mistake in English contract law, available at https://en.m.wikipedia.org/wiki /Mistake_ in_English_contract_law, ( last visited on December 31,2023).

Case Summary: Lewis v Averay [1972] 1 QB 198, available at https://careerinlaw .net/uk/case-summary-lewis-v-averay-1972-1-qb-198 , ( last visited on January 1,2024).