Hardman v Booth (1863) 1 H & C 803
Contract - Fraud - Power of Sale
The plaintiff was a manufacturer who wished to sell goods to Gandell & Co. Edward Gandell was a clerk who worked there and led the plaintiff to believe he was an owner of the company and authorised to contract for the sale of goods. Edward began trading with the plaintiff under the company name, without the knowledge of his boss, the real company owner. The plaintiff sent the goods to the address of Gandell & Co and then Edward sold them to the defendant, who purchased them in good faith, not knowing Edward was not authorised to make any contracts for the sale of goods. The defendant then sold the goods under a power of sale to a third party.
Whether there was an enforceable contract of sale between the defendant and Edward, and whether the plaintiff could recover the goods from the defendant.
The claim was allowed as there was no contract of sale. Even though the plaintiff believed he was contracting with Gandell & Co., he was contracting with Edward in his individual capacity. He was never authorised to contract for Gandell & Co. so any contract made in their name was considered void as it was made on a fraudulent basis. As there was no legally enforceable contract, the possessory title never passed from the plaintiff to Edward. As such, it could not then pass from Edward to the defendants. Thus, the defendant was liable for the value of the goods, payable to the plaintiff.