Cundy v Lindsay (1877–78) LR 3 App Cas 459 is an English contract law case on the subject of mistake, introducing the concept that contracts could be automatically void for mistake as to identity, where it is of crucial importance.
Believing the correspondence to be from this company, Lindsay & Co delivered to Blenkarn a large order of handkerchiefs.
[4] Blenkarn then sold the goods – 250 dozen linen handkerchiefs – to an innocent third party, Cundy.
[5] The rule of law has been thoroughly established—the cases are numerous, and I need not cite them—that where a contract is voidable on the ground of fraud, you may avoid it, so long as the goods remain in the man's hands who is guilty of the fraud, or in the hands of anybody who takes them from him with notice; but where a person has bonâ fide acquired an interest in the goods, you cannot, as against that person, avoid the contract.
The Court of Appeal, with Mellish LJ, Brett J and Amphlett JA overturned the Divisional Court, holding that Lindsay could recover the handkerchiefs, since the mistake about the identity of the rogue voided the contract from the start.
Lord Cairns explained the mistake as to identity, and the consequences: Now, my Lords, stating the matter shortly in that way, I ask the question, how is it possible to imagine that in that state of things any contract could have arisen between the Respondents and Blenkarn, the dishonest man?
[3] In Shogun Finance Ltd v Hudson [6] Lord Nicholls, dissenting, stated it to be an "eroded" principle of law.
Cundy v Lindsay was decided over a century ago, and since then there have been significant developments in this area of case law.