CONTRACT LAW REVIEW NOTES
MISTAKE
Bilateral Mistakes:
• Two types:
• 1. Each party is mistaken, but do not share their mistake
2. The parties share their mistake
Absence of agreement:
The parties are each mistaken but don’t share the mistake, the
offer and acceptance doesn’t correspond and so there is an
absence of agreement and no contract exists.(cross purpose).
-Raffles v Wichelhaus 1864(Peerless)
Common Mistake:
Occurs where both parties to a contract make the same mistake
about a critical element of their agreement.
-Bell v Lever Bros. 1931(consensual theory of contract)
Non-existence of subject matter:
Unknown to either party the subject of contract doesn’t exist.
-Couturier v Hastie 1956, (corn)
In a contract for sale of goods, SGA 1979 S.6 applies, ‘where the
goods have perished without the seller’s knowledge, the
contract is void.’
Different interpretation as in:
• McRae v Commonwealth disposals commission
1951(Australia)(Purchased tanker didn’t exist at given location)
the Aussie High Court expressed doubt that Couturier involved
issues of mistake and that case was about construction of
contract entered.
• McRae was a contract of chance.
• The McRae approach was approved in Great Peace Shipping 2002
Mistake as to Ownership:
Res Sua: Unknown to either party, the item is already owned by
the buyer, and hence the agreement can’t be performed
MISTAKE
Bilateral Mistakes:
• Two types:
• 1. Each party is mistaken, but do not share their mistake
2. The parties share their mistake
Absence of agreement:
The parties are each mistaken but don’t share the mistake, the
offer and acceptance doesn’t correspond and so there is an
absence of agreement and no contract exists.(cross purpose).
-Raffles v Wichelhaus 1864(Peerless)
Common Mistake:
Occurs where both parties to a contract make the same mistake
about a critical element of their agreement.
-Bell v Lever Bros. 1931(consensual theory of contract)
Non-existence of subject matter:
Unknown to either party the subject of contract doesn’t exist.
-Couturier v Hastie 1956, (corn)
In a contract for sale of goods, SGA 1979 S.6 applies, ‘where the
goods have perished without the seller’s knowledge, the
contract is void.’
Different interpretation as in:
• McRae v Commonwealth disposals commission
1951(Australia)(Purchased tanker didn’t exist at given location)
the Aussie High Court expressed doubt that Couturier involved
issues of mistake and that case was about construction of
contract entered.
• McRae was a contract of chance.
• The McRae approach was approved in Great Peace Shipping 2002
Mistake as to Ownership:
Res Sua: Unknown to either party, the item is already owned by
the buyer, and hence the agreement can’t be performed
