MISTAKE basic info
Three types of mistake:
A. Common mistake - Where both parties make the same mistake
B. Mutual mistake - Where the parties are at cross purposes
C. Unilateral mistake - Where only one party is mistaken
Where the courts make a finding of mistake this will generally render the contract void ab
initio (from the beginning) so it is as if the contract never existed. This represents an
important distinction from voidable contracts.
- Voidable: the contract exists and is valid until such time as the innocent party takes
action to set the contract aside. Thus where there is a voidable contract a person acquiring
goods under a contract will obtain good title to those goods.
- Void: In a void contract no title passes.
This distinction is most relevant where the goods have been sold on to a third party. A
purchaser of the goods will acquire good title if the original contract was voidable, but will
not obtain title if the contract is void.
1. Common mistake
Common mistakes exist where both parties to the contract make the same mistake. Three
categories have emerged as giving rise to a cause of action:
“The following elements are to be present if common mistake is to avoid a contract:
(i) There must be a common assumption as to the state of affairs;
(ii) There must be no warranty by either party that the state of affairs exists
(iii) The non existence of the state of affairs must not be attributable to the fault of either
party;
(iv) The non existence of the state of affairs must render performance of the contract
impossible;
(v) The state of affairs must be the existence, or a vital attribute of the consideration to be
provided or circumstances which must subsist if performance of the contractual
adventure is to be possible.”
, - Res extincta - the subject matter of the contract no longer exists
- Res sua - where the goods already belong to the purchaser
- Mistake as to quality - only available in very narrow limits
- Title : Mistake in relation to title: where the contract is to transfer property from one
person to another, but the other already owns the property and neither party was aware of
this.
- Identity
Mistake as to existence of subject matter:
Galloway v Galloway (were not actually married; deal of separation was void as they were
never married in the first place)
McRaw v Common:
Coututier v Hasting: corn shipment went out before agreement was finalised; corn went bad;
commodity didn’t exist at time of contract therefore buyer was not liable.
Mistake as to quality of subject matter:
Smith v Huges: wanted old oats for horse feed but received new ones; responsibility of
buyer to know quality, objective test, offerer not obliged to tell buyer what selling (cannot
hide) (use for unilateral)
Bell v Lever Bros:
Leaf v Intl Galleries: painting bought thinking it was a Constable, it was not, affirmation
was a bar to rescission
Great Peace Shipping: Test is same in fact, law and equity. Unifies equity, law
Mistake as to title
Cooper v Fibbs: Nephew already owned fishery in question when he went to lease it-
mistake as to who owned title. Cannot lease from someone who does not own title
*Solle v Butcher*: Lord Denning: contract was set aside if one party was induced by
material rep of other even if it was not fraudulent or fundamental…
Impossibility of common mistake
Sheikh Bros
Commercially impossible: Griffith: coronation case
Mistake in identity
Raffles v Wichelhaus: Which boat was it? Latent Ambiguity
Three types of mistake:
A. Common mistake - Where both parties make the same mistake
B. Mutual mistake - Where the parties are at cross purposes
C. Unilateral mistake - Where only one party is mistaken
Where the courts make a finding of mistake this will generally render the contract void ab
initio (from the beginning) so it is as if the contract never existed. This represents an
important distinction from voidable contracts.
- Voidable: the contract exists and is valid until such time as the innocent party takes
action to set the contract aside. Thus where there is a voidable contract a person acquiring
goods under a contract will obtain good title to those goods.
- Void: In a void contract no title passes.
This distinction is most relevant where the goods have been sold on to a third party. A
purchaser of the goods will acquire good title if the original contract was voidable, but will
not obtain title if the contract is void.
1. Common mistake
Common mistakes exist where both parties to the contract make the same mistake. Three
categories have emerged as giving rise to a cause of action:
“The following elements are to be present if common mistake is to avoid a contract:
(i) There must be a common assumption as to the state of affairs;
(ii) There must be no warranty by either party that the state of affairs exists
(iii) The non existence of the state of affairs must not be attributable to the fault of either
party;
(iv) The non existence of the state of affairs must render performance of the contract
impossible;
(v) The state of affairs must be the existence, or a vital attribute of the consideration to be
provided or circumstances which must subsist if performance of the contractual
adventure is to be possible.”
, - Res extincta - the subject matter of the contract no longer exists
- Res sua - where the goods already belong to the purchaser
- Mistake as to quality - only available in very narrow limits
- Title : Mistake in relation to title: where the contract is to transfer property from one
person to another, but the other already owns the property and neither party was aware of
this.
- Identity
Mistake as to existence of subject matter:
Galloway v Galloway (were not actually married; deal of separation was void as they were
never married in the first place)
McRaw v Common:
Coututier v Hasting: corn shipment went out before agreement was finalised; corn went bad;
commodity didn’t exist at time of contract therefore buyer was not liable.
Mistake as to quality of subject matter:
Smith v Huges: wanted old oats for horse feed but received new ones; responsibility of
buyer to know quality, objective test, offerer not obliged to tell buyer what selling (cannot
hide) (use for unilateral)
Bell v Lever Bros:
Leaf v Intl Galleries: painting bought thinking it was a Constable, it was not, affirmation
was a bar to rescission
Great Peace Shipping: Test is same in fact, law and equity. Unifies equity, law
Mistake as to title
Cooper v Fibbs: Nephew already owned fishery in question when he went to lease it-
mistake as to who owned title. Cannot lease from someone who does not own title
*Solle v Butcher*: Lord Denning: contract was set aside if one party was induced by
material rep of other even if it was not fraudulent or fundamental…
Impossibility of common mistake
Sheikh Bros
Commercially impossible: Griffith: coronation case
Mistake in identity
Raffles v Wichelhaus: Which boat was it? Latent Ambiguity
