Phillips v Brooks Ltd - 1919

Law Case Summary

Phillips v Brooks Ltd [1919] 2 KB 243

Contract – Sale of Goods – Passing of Property – Fraud

Facts of Phillips v Brooks

Phillips was a jeweller. The fraudster purchased a ring from the jeweller with a cheque and signed his name “Sir George Bullough” and provided this person’s address. Phillips knew of Bullough and knew he lived at the address, so allowed him to take the ring before the cheque cleared. The purchaser subsequently turned out not to be ‘Sir George Bullough’. The fraudster then pledged the ring to a bona fide third party.

Issue in Phillips v Brooks

Whether Phillips could rely on mistake to identity to void the contract and seek possession/ownership of the ring.

Decision/Outcome of Phillips v Brooks

It was found that whilst the fraudster had indeed fraudulently purchased the ring there was no mistake as to identity due to the fact this contract was made face-to-face. Whilst fraudulent statements were made, the identity of the fraudster could not be considered ‘mistaken’. Importantly, a fraudulent contract is voidable (not void) and permits property to pass to bona fide third-party meaning Brooks Ltd was the legal owner of the ring.