Presented by

Dr Aminu M. Bashir
PhD (QS), MSc (PM), BSc (Q/S), FNIQS, MAPM, ACIArb, RQS
 Mistake has a varying definition in contract law as opposed to the
definition of a layman. What is regarded as mistake by a layman
will in most cases not be so regarded at law.
 Mistake has been classified in various ways as follows,
COMMON MISTAKE
* Where both parties to a contract concluded it under the same
(common) mistake or misapprehension about some fact which lies at
the basis of the agreement, a common mistake is said to have
occurred. For instance, if A and B contracted for the sale of A’s car to
be at the sum of N2million at 1.00pm and unknown to both A and B
the car has been destroyed by an inferno at 10.00am of the same
day, both parties have made a common mistake. The contract will be
vitiated because the subject-matter of the contract was already
destroyed before the contract was concluded. Knight, Frank, Rutley v.
AG Kano State Govt. (1979)
COMMON MISTAKE (Contd.)
• Categories of Common Mistake are,
• Res extincta: non-existence of the subject-matter of the contract: A
mistake as to the existence of the subject-matter of the contract
renders it void. Couturier v. Hastie (1856)
• Res sua: absence of title in seller of subject-matter: Where in a
contract of sale the seller is unable to transfer the title and
property in the subject-matter because the latter, unknown to both
parties, already belongs to the purchaser, the contract would be
void for mistake. Cooper v. Phibbs (1867)
MUTUAL MISTAKE
 Where the two parties are mistaken about each other’s terms in
the sense that one party makes to the other an offer which the
other party “accepts” in a fundamentally different sense from that
intended by the offeror, the mistake is said to be mutual. For
instance, if A offers to buy B’s car at N400,000 and B who owns 2
cars (Toyota & Mercedes Benz) accepts the offer in the belief that it
was made for the Toyota, the contract will be vitiated when A later
says his offer is for the Mercedes Benz. Both parties are contracting
out of a mutual mistake. Wood v. Scarth (1858)
UNILATERAL MISTAKE
 The mistake is unilateral where only one party is mistaken or is
presumed to be mistaken. For instance, if a rogue enters HONDA
Palace and presents himself as the VC of BUK and collects a brand
new Accord 2022 model “for usage in conveying VIPS from Airport
to Convocation Arena” claiming to send the University Bursar
tomorrow for payment, the rogue is not acting under any mistake.
He induced the mistake of the sales manager by his own fraud.
Abdul Yusuf v. Nigerian Tobacco Company (1974)
 Forms of Equitable Relief: forms of equitable relief
provided by equity in contractual mistake are,
 Rescission: although a mistake may not be void at
common law because it is not sufficiently fundamental,
the court will set it aside if it will be unfair or bring
undue hardship or if the party requesting enforcement
ought to have known the other was mistaken.
 Refusal of specific performance: the court may refuse to
grant specific performance of the agreement in the
interest of justice, or in order to mitigate the hardship
which the party resisting specific performance will suffer.
 Rectification: the court may allow a written agreement to
be rectified either to exclude a term wrongly or
mistakenly included or to include a term wrongly left out.
It may also order the specific performance of the
agreement as rectified. Craddock v. Hunt (1923)
 What is misrepresentation? An untrue statement made by one
party (to a contract) to the other at the time of contracting,
with regard to some existing fact or to some past event which is
one of the causes that induced the contract.
 What constitutes misrepresentation?: where a statement of
opinion is made in good faith, the representor cannot be liable
for misrepresentation merely because the statement turns out
to be correct. For misrepresentation to occur it must consist of
a statement of facts and either in the past or present e.g. Smith v.
Land and House Property Corporation (1884).
 Failure to disclose: While a false statement of fact inducing the
re p re s e n t e e t o e n t e r i n t o a c o n t r a c t c o n s t i t u t e s a
misrepresentation, a representor is not obliged to disclose
material facts known to him to a representee even though he
knows it may discourage the representee from entering into a
contract. Fletcher v. Krell (1872) and Percival v.Wright (1902).
 Exceptions to the Non-disclosure rule: a representor who
makes a true statement that later turn out to be untrue to the
knowledge of the maker before concluding the contract would
be liable for misrepresentation if he failed to notify the
representee of the change (called partial non disclosure).
 Misrepresentation by conduct: A person who conducts himself
in a manner which suggests a particular state of affairs exists,
that person will be guilty of misrepresentation if the conduct
turns out to be misleading. A person who enters into a
restaurant and orders a meal impliedly represents he has the
means to pay. Livesley v. Rathbone (1974)
 Contracts uberrimae fidei (of utmost good faith): are contracts in
which one party of necessity possesses full knowledge of the
material facts. The law therefore requires such a person to
show good faith so that the other party is not placed in a
position of acute disadvantage. Under such circumstances the
party with full knowledge is under a duty to make full disclosure.
These types of contracts involve insurance, family arrangements,
sale of land, partnership etc. Gordon v. Gordon (1817).
 Representation and Inducement: In order to succeed in an
action for misrepresentation, the plaintiff must establish that the
statement was made by the defendant or his authorised agent. A
representation does not become a ground for rescission unless it
is intended to cause and in fact causes the representee to enter into
the contract. The burden of proving this lies on the representee
alleging the misrepresentation Smith v. Chadwick (1884).
 Fraudulent Misrepresentation: A false statement “made
knowingly, or without belief in its truth or recklessly, careless
whether it is true or false”. According to Lord Herschell, where
there is lack of honest belief in that which is stated, that
statement is fraudulent. Once fraud is established, the motive of
the person guilty is immaterial. Abba v. Mandilas & Karaberis Ltd
 Negligent misrepresentation: this is a misrepresentation made
carelessly or without reasonable grounds for believing it to be
true. Misrepresentation cannot be regarded as negligent unless
there is a duty of care to the representee. This duty of care
exists between parties in a fiduciary relationship such as lawyers
or doctors with their clients/patients. Nocton v. Ashburton (1914)
 Innocent Misrepresentation: this means misrepresentation that is
neither fraudulent nor negligent. Simply put it is
misrepresentation made without fault. The common law
provides no remedy for innocent misrepresentation. In equity,
however available remedies include rescission and in some cases
indemnity.
 The effect of misrepresentation is that it entitles the injured
party to avoid the transaction induced by the misrepresentation
either by having it rescinded or to recover damages for injury.
 Damages: an action for negligent or fraudulent
misrepresentation is an action in tort. The general rule is that
the plaintiff will be restored in the position he would have been
if the misrepresentation had not happened. Doyle v. Olby Ltd
(1969)
 Indemnity distinguished from damages: unlike damages,
indemnity does not entail the restoration of the plaintiff to the
position he would have been if the representation had not been
made. He is however entitled to be indemnified against
obligations necessarily created by the contract, as against
obligations arising out of the contract. Whittington v. Seale-Hayne
(1900).
 Rescission: a person induced to enter a contract as a result of
misrepresentation, the representee is entitled to bring an action
for the rescission of the contract. This is applicable in all classes
of misrepresentation whether fraudulent, negligent or innocent
misrepresentation.