CONTRACT ESSAY

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Lord Hobhouse of Woodborough and Lord Walker of Guestingthorpe have concluded that, as the contract was the written document, the identity of the hirer falls to be ascertained by constructing that document… Lord Nicholls of Birkenhead and Lord Millet have adopted a different approach. They point out the illogicality of applying a special approach to face to face dealings... They propose elegant solution to this illogicality. Where two individuals deal with each other, by whatever medium, and agree terms of a contract, then a contract will be concluded between them, notwithstanding that one has deceived the other thinking that he has the identity of a third party. In such a situation the contract will be voidable but not void... While I was strongly attached to this solution, I find myself unable to adopt it. Per Lord Philips of Maltravers in Shogun Finance Ltd v Hudson [2003] UKHL 62; [2004] 1 AC 919 at [167]-[170]
Explain why you agree or disagree with the approach of Lord Nicholls and Millet.
It is evident from case law that the law regarding mistake has been inconsistent as a result of irregular decisions being made in cases with similar facts. In situations where a third party and their rights are concerned it is necessary to consider if the contract between A and B is void or voidable. Therefore, It is no surprise that Lord Nicholls and Lord Millet have raised an issue with the decision taken by the majority in Shogun Finance Ltd v Hudson and have deemed the law of contract to be unsatisfactory and unprincipled. However, before discussing that in depth it is important to understand the basic law of mistake. As defined by Pendleton in Vickey [1998] mistake can be a ‘misunderstanding regarding a fact, causing one or more parti...

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...bsolete, and the decisions in Ingram and Hector v Lyon will be overruled by doing so. The law is constantly changing as time goes on and it seems the time for this particular law to change has come.
In conclusion, the majorities effort to adopt a formalist approach and affirm the accuracy of Cundy do not seem like they can stand as the cracks in the decisions made have shown. Lord Nicholls and Millets approach is just more realistic and will allow judges to really look at the facts of cases rather than try their best to keep in form with the doctrine in Cundy. Taking the minorities approach is best all round as it means the law can be fairer especially when considering third parties. This area of law has been complicated for far too long, when really the confusion is unnecessary. The decision in Shogun has indeed been a missed opportunity to clarify the law (Hare).

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