I can’t make up my mind whether wordle is a pretty annoying gimmick or a useful analytical tool which produces pretty results. The image on the left is a wordle anaylsis of the interesting decision of the House of Lords in Shogun Finance v Hudson  1 AC 1101,  UKHL 62 (19 November 2003) produced by Michael Bromby on Digitial Directions. Michael has produced wordles for each of the speeches in the House of Lords and their conclusions will have have far-reaching consequences not only for the Law of Contract but also in circumstances of identity theft.
In the case itself, Durlabh Patel sought to buy a Mitsubishi Shogun SWB from a dealer on hire purchase. The effect of the hire purchase agreement was that the hire purchase company, Shogun Finance [Finance] stood in the place of the dealer, and so was effectively the seller of the car. To encourage the sale, Patel produced his driving licence, and Finance did a credit check on him; when that was satisfactory, Finance agreed to the hire purchase and instructed the dealer to let Patel have the car. Patel then sold the car on to Norman Hudson. So far, so uncontroversial; it happens all the time; and the car seller would then pay off the outstanding remainder of the hire purchase price, and buy a new car. But this time it was different. The purchaser was in fact a crook who had stolen Patel’s driving licence, and after the sale to Hudson, the crook absconded with the purchase money (a sizeable sum, though probably not enough for a new life in Rio), leaving Finance and Hudson to sort out the mess.
In these kinds of cases, the basic question is who should bear the loss created by the absconding crook: here, either Finance have lost not also the money loaned to the fake Patel but also the car now in Hudson’s possession, or he has to return the car or its value to Finance; either way, one or the other is out of pocket. The courts have usually taken the view that if there is a valid contract between the original seller and the crook (here, between Finance and the fake Patel) then there can be a valid sale from the crook to the fall guy (here, from the fake Patel to Hudson), and the original seller (here, Finance) loses out; but if there is not a valid contract between the original seller and the crook, then there is no question of there being a valid sale from the crook to the fall guy, and the fall guy loses out. The crook’s fraud is usually sufficient only to render any contract between the seller and the crook voidable and not void; so that if the contract has not been avoided by the seller, then there is still a contract between the seller and the crook sufficient to allow the crook to make a valid sale to the fall guy. So, in general, a seller cannot rely on a crook’s fraud to recover property from a fall guy. On the other hand, if the effect of the crook’s fraud is that the seller is mistaken, then the original contract between the seller and the crook could be void for mistake, provided that the seller’s unilateral mistake as to the crook’s identity was fundamental to the sale. Of this issue, Lord Phillips began his speech (at para 111) with the observation that it is “theme that has bemused courts and commentators alike for over 150 years”; and Lord Millett commented, at para 57:
Generations of law students have struggled with this problem. They may be forgiven for thinking that it is contrived by their tutors to test their mettle. After all, the situation seems artificial and is one which is seldom likely to arise in practice, at least in the absence of fraud. Unfortunately fraudulent impersonation is not at all uncommon today. The growth in the number of credit transactions, often entered into electronically between persons unknown to each other, has led to a surge in what has been called “theft of identity”, that is the fraudulent assumption of another’s identity by a customer in order to have the wrong account debited or to misdirect enquiries into his own creditworthiness.
Of course, there are lots of other legal and practical consequences of identity theft, especially for those whose identities are stolen (see these helpful Irish, UK, and various US sites): in this repsect, Mr Patel got away lightly – the crook just used his driver’s licence. But the judgment does go a long way to sorting out the downstream consequences to other parties of the original identity theft.
So much for the basic principle; the fact that the effective seller in the case was a hire purchase finance company adds a wrinkle, but when it is ironed out, the same basic principle emerges. Where the original seller is a hire purchase provider, as Finance was here, then, in the UK, section 27(2) of the Hire-Purchase Act 1964, as substituted by the Consumer Credit Act 1974, reinforces this position, by providing that where the sale from the crook to the fall guy is a private sale, and the fall guy is a purchaser of the car “in good faith, without notice of the hire-purchase or conditional sale agreement”, then that sale is as effective as if the hire purchase provider’s title to the car had been vested in the crook at the time of the sale. For Hudson to have the benefit of this section, he had to establish that there was in fact a valid contract between Finance and the fake Patel; whereas for Finance to be able to avoid the section, they would have to establish that any contract between them and the fake Patel was void for mistake – that is, that the unilateral mistake which the fake Patel induced in them about his identity was sufficiently fundamental to render the hire-purchase contract void. And this is exactly the same question as in the basic position, above.
At first instance, the judge found that there was just such a mistake, and gave judgment for Finance. The Court of Appeal, by a majority, agreed (see  QB 834,  EWCA Civ 1000 (28 June 2001)). The House of Lords, also by a majority, also agreed. The effect was that any contract between Finance and the fake Patel was void for a unilateral mistake as to his identity, and he had no title to give to Hudson, so that the car belonged not to Hudson but to Finance. From a moral standpoint, it seems an unfair outcome, but any outcome here will be unfair, as the crook has engineered a loss, and the only question is which of these two innocent parties will ultimately bear it. From a legal standpoint, it is a controversial outcome, but any outcome here will be controversial, as the law was in an unclear state before the decision, and the result at least has the merit of clarifying the matter.
All five of the Law Lords agreed on the analytical starting point, that in cases of face to face dealings, where the vendor sells to a crook who has fraudulently assumed another identity, (in the vast majority of cases) the vendor’s unilateral mistake as to the crook’s identity is not sufficiently fundamental to render the contract of sale void; the vendor contracts with the person present, and the mistake as to the crook’s identity does not negative the vendor’s consent to this contract. However, the majority of the House of Lords held that a different principle applied where the parties were remote from one another, as where the contract was concluded by correspondence. In such cases, as Lord Hobouse (Lord Walker concurring) put it at para 48, unlike in face to face situations where the seller is willing to do business with anyone who is present, companies like Finance are not willing to do business with anyone, but only
with a person who had identified himself in the way required by the written document so as to enable it to check before it enters into any contractual or other relationship that he meets its credit requirements. … Correctly identifying the customer making the offer is an essential precondition of the willingness of the finance company to deal with that person.
As Lord Phillips put it at para 161
… a person carrying on negotiations in writing can, by describing as one of the parties to the putative agreement an individual who is unequivocally identifiable from that description, preclude any finding that the party to the putative agreement is other than the person so described. The process of construction will lead inexorably to the conclusion that the person with whom the other party intended to contract was the person thus described.
On the other hand, the minority of the House of Lords held that the same principle should apply in all cases, whether the contracts are made in face to face dealings or by parties distant from another; Lord Millett thought that any distinction was simply unrealistic (at para 68, see also 71); as Lord Nicholls put it, at para 33:
The legal principle applicable in these cases cannot sensibly differ according to whether the transaction is negotiated face to face, or by letter, or by fax, or by e-mail, or over the telephone or by video link or video telephone.
And Lord Millett explained the common rule, at para 81:
Whatever the medium of communication, a contract comes into existence if, on an objective appraisal of the facts, there is sufficient correlation between offer and acceptance to make it possible to say that the impostor’s offer has been accepted by the person to whom it was addressed. While a person cannot intercept and accept an offer made to some one else, he should normally be treated as intending to contract with the person with whom he is dealing. Provided that the offer is made to him, then whether his acceptance of the offer is obtained by deception or mistake, and whether his mistake is as to the identity of the offeror or some material attribute of his, the transaction should result in a contract, albeit one which is voidable.
There is an attractive logic to both positions, but in the end, I prefer the minority position: it has the merit of simplicity and consistency. Nevertheless, at least the majority position has the merit of clarity and certainty, and that is nothing to be sneezed at. In Ireland, there is some guidance on the issue: in Director of Public Prosecutions v Dillon  4 IR 501, Hardiman J for the Court of Criminal Appeal, in interpreting a statutory reference to an “agreement”, held that there was no agreement where one party to a telephone conversation purported to be someone else. The statutory provision is now not in force, and indeed was not so at the time of the Dillon decision (giving rise to interesting questions of precedent in DPP v Geasley  IECCA 22 (24 March 2009)), but none of this affects the contract law analysis. On that issue, Hardiman J’s conclusion is similar to that of the majority in Shogun Finance v Hudson, and so it can be taken that by virtue of Dillon, an Irish court would probably reach the same outcome as the majority in Hudson.
Now, as to Michael’s wordles for each of the speeches, he concludes:
… Hobhouse and Walker both mention the word ‘contract’ far less than the others. Walker is the only one to mention ‘principle’ to any great level, and he also uses the word ‘Lord’ extensively, but then he does concur with and make many references to Hobhouse’s speech. Nicholls and Hobhouse both refer quite often to a ‘crook’ and a ‘rogue’ respectively, but only Hobhouse refers to ‘Patel’ the innocence third party in the case to any great extent. Phillips makes more use of the word ‘contract’ than anything else, whereas the other Lords often make similar usage of other words such as ‘person’ and ‘agreement’. I could go on, but I’m not quite sure what this analysis tells me. …
I’m not sure what it tells me either. But it might prove a useful way into the case in a lecture or seminar.