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Which of the following statements about Cundy v. Lindsay and Phillips v. Brooks is…

Law of Contract I (General Principles)

Which of the following statements about Cundy v. Lindsay and Phillips v. Brooks is correct?

Show answer and explanation

Answer: B. In Phillips v. Brooks, the seller's mistake was as to creditworthiness, not identity, so the contract was only voidable for fraud.

Explanation

In Phillips v. Brooks the seller dealt face to face and was taken to intend to sell to the person in his shop, whoever he was; his mistake was only about the buyer's creditworthiness, so the contract was voidable, and Brooks, who took the ring in good faith before it was avoided, kept it. Cundy v. Lindsay is the opposite case: the dealing was by letters and Lindsay intended to deal only with the respectable firm, so there was no contract at all and Cundy got no title.