mistake

A mistake must precede the contract; it should be there before the contract is formed. A successful
claim for mistake brings the contract to an end, make it void, it is a difficult case to prove.

Common Mistake: both the parties have a shared mistake of a fact or law. Some unforeseen
circumstances occur before the formation of the contract and make it radically different from what
has assumed by so the contract will be void for mistake as not it wont be just for the parties to
continue. So now the consent is vitiated, ending the contract. (bell v lever brothers)

This mistake must be operative and a fundamental one, Lord thankerton said that it should be of
something so important in the mind of the parties as courts are not willing to end a contract simply
bcz now it’s a bad bargain.

Common mistake will be seemed to be fundamental if it is to the existence of the subject matter of
the contract. (Galloway v Galloway)

Sales of goods act 1979, s 6 says “Where there is a contract for the sale of specific goods, and the
goods without knowledge of the seller have perished at the time when the contract is made, the
contract is void.”

So if the parties are not aware that the goods have perished then the contract will be void for
mistake In Courtier v Hastie, it was held that at the formation of the contract it was assumed that
goods existed however they were already been sold by the ship captain, so no duty to pay.

In Mc Crae, courts held that non existence of tanker will lead to a breach of the contract as here the
defendant had promise to the tankers existence at the place.

If there is a common mistake as to the identity of the subject matter, then the parties will succeed in
mistake as per Canadian case of Diamond v British Columbia

If the parties share a common mistake that the contract can be performed but it cannot be done
actually due to physical impossibility, legal impossibility and commercial impossibility.

Cases: sheikh bros ltd v ochsner, cooper v phibbs and Griffith v brymer

If there is a common mistake as to the quality, it is unlikely that it will be a fundamental mistake as
said in Oscar chess v Williams here D sold the car believing it to be 1948 model but instead it was
1939 model

In bell v lever brothers, lord Atkin provided a test for mistake as to quality that for it to be
fundamental, if the mistake is to both the parties and makes the quality of contractradically
different. Here he concluded that the mistake was not a fundamental one. It was applied in sole v
butcher, here landlord had to end the lease. But in great peace shipping case, there was a mistake as
to the location of the vessel, it was assumed to be closer than it was, courts held that this was not a
fundamental mistake as it only cause a delay. Thus it is a strict rule.
 mistake

Lord denning for mistake in equity made the test very strict and laid three differences

Mistake must be a fundamental one and the party for relief should not be at fault

Mistake in equity makes the contract voidable, thus protecting the rights of a third innocent party

Wider remedies are available like rectification and specific performance

Great peace shipping overruled sole and butcher, use notes in journal

Japanese case from lgu notes

The second type of mistake is mistake in communication.

Cross-purpose mistake: When both the parties are mistaken to the same thing, this leads to the
content being vitiated and no contract can be formed. The courts asses the cross purpose mistake
objectively so that to promote certainty in law.

As in Raffles v Wichle haus, contract was void for common mistake

in scriven bros and co v hindley, contract was not set aside for common mistake due to the
misleading nature of the catalogue.

Unilateral Mistake: When the party is mistaken as to a term of the contract and the other party is
aware of the mistake, then party cannot rely to end the contract for mistake (Hartog v Collins)

Smith v Hughes, it is concerned about the sale of the oats. The buyer refused to get the oats as they
were new and he wanted old oats. Here courts provided us with a distinction that where the buyer
correctly understands the offer but is himself mistaken that the oats are old, then he is not liable
under any duty to inform the buyer despite he is aware of the mistake. But where the seller knows
that the buyer is mistaken but this time the buyer is mistaken as to the terms of the sellers offer. In
such a case there is an offer and acceptance mistake, and the seller has an obligation to inform the
buyer of the true nature of his offer.

Mistake as to identity: This occurs in cases when party assumes to enter into a contract with the
other party but they are a rogue or a thief so they end up not paying, you’re mistaken as to their
identity. But the real issue arises when after the fraud; rogue sells the item to an innocent third
party, courts here then tries to provide relief to the innocent third party. If the contract is void, then
the seller had no contract with the rogue so he then cantsell it to the third party, so they have to
return the goods. However, in equity the contract is deemed to be voidable thus the third party is
protected and they do not have to pay.

Mistake operates to render a contract void and a contract that is void is set aside for all purposes
and generally produces no legal effects. So if the contract was void for mistake the rogue could not
 mistake

have acquired rights in the goods from the seller and has no property rights to pass them on to an
innocent third party. On this basis the original seller will win and will be entitled to recover the
goods.

In shogun finance and Hudson, it was held that if the contract is made face-to-face then party seller
wishes to have a contract with the person in front so the claim for mistake as to identity will fail.

In ingram v little, the parties refused to accept the cheque of the rough until he proved his identity
as to a famous actor later it was held to be fraudulent, courts held that contract is void for mistake
as to identity despite it being a face to face contract

However, in lewis v averey, the contract was upheld and not void for mistake despite the rogue
attempt to produce the identity card, courts confined the rule of Ingram to its own facts. It is unlikely
that ingram will be followed.

If the contract is made in writing then it is assumed that the written false identity can lead to a void
contract for mistake. In Cundy v Lindsay, here the contract was void for mistake as the party had
assumed to contract with Blenkarn not the rogue. However, thus rule is not absolute.

In King Norton Metal Co v Edrid Merret and Co ltd, here rogue claimed to be an owner of a company
which never existed in real so the courts differentiated it with cundy v Lindsay in a way that here the
mistake was as to attributes not as to the person. So contract was not void for mistake.

Documents signed under a misapprehension as to their contents

A person must notmally take full responsibility for his signature and it is up to him to make sure that
he appreciates what he is signing. Exceptionally a person may have been so misled that the
document may be held to be void under the defence of non est factum (it is not his deed). In Gailee v
Lee it was held that this defence will be available to any onw who signed the documents with a
fundamental misapprehension as to the substance of the document—provided that the person who
signed the documents took all due care. The burden of proof lies on the signer to show that he was
not negligent and this is not easy to discharge.