10. mistake

mistake intro

The effect of a fundamental mistake made before the contract has been formed is to render the contract void

mistake framework

1. agreement mistake

   • mistake as to identity

   • mistake as to the nature of the document signed

   • mistake as to a term of the contract

2. common mistake

   • mistake as to subject matter

   • mistake as to ownership

   • mistake as to quality

   • mistake in equity

am: identity mistake (2 + 4 cases)

• In contracts made face-to-face, the identity of the parties is a collateral issue such that a mistake as to identity would likely NOT void the contract [phillips v brooks 1919] / [lewis v avery 1972]

• In contracts made at a distance, the identity of the parties is of fundamental importance such that a mistake as to identity may likely void the contract [cundy v lindsay 1978] / [shogun finance v hudson 2003]

phillips v brooks 1919

jeweller did not make careful enough check on identity of customer who came into shop saying ‘you see who i am i am sir george bullough’ and gave an address - no claim

lewis v averay 1972

d wanted to buy a car and said he was a well known actor and wrote out a cheque in his name - not mistake

cundy v lindsay 1978

signed goods fraudulently to be from a reputable company but were actually getting goods from a rogue - mistake

shogun finance v hudson 2003

fraudster visited show rooms of car to buy on higher purchase and signed as mr patel with driving licence - drove away immediately after paying deposit - identity funamental to contract so mistake

am: mistake as to the nature of document signed (2+1case)

non est factum - it is not my deed

the document must be radically different document to the one c think they are signing [saunders v anglia building society 1971]

saunders v anglia building society 1971

78 year old widow asked to sign document to give deeds of house to nephew but her glasses were broken - no non est factum document signed not radically different to the one she thought she signed

am: mistake as to a term of the contract (4 + 4 cases)

A mistake as to a term of the contract may void the contract only if there was no reasonable understanding or interpretation about what had been agreed upon.

the other party must have realised the mistake - unilateral mistake [hartog v colin & shields 1939]

no consensus in contract = no agreement [raffels v wichelhaus 1864]

mistake if impossible to say what should have been understood [scriven bros & co v hindley 1913]

[smith v hughes 1871]

hartog v colin & shields 1939

d offered to sell hare skins for 10d per pound but intended to sell them for the same price per piece as it was trade custom, d’s offer was a third of the normal price - held in favour of d as not d’s true intention so no binding contract

raffels v wichelhaus 1864

contract to buy cotton on ship peerless from bombay, two ships called peerless were sailing from bombay in different months - no agreement as not possible to determing the intention of which ship

scriven bros & co v hindley 1913

two lots of cargo up for auction and buyers bid believing both to be hemp but one was tow - contract void as impossible to what should have been understood by the lot on display

smith v hughes 1871

p got new oats instead of old oats, d refused to pay claimaing contract was void for mistake - court rejected defence as absence of any express mention by d that required old oats

cm: mistake as to the subject matter (1 +2 cases)

if at the time of contract and unbeknown to the parties, the subject matter of the contract is not in existence, there can be no contract [couturier v hastie 1856]

[mcrae v commonwealth disposals commission 1951]

couturier v hastie 1856

owner sold corn to buyer when it was believed to be in transit by ship, but unknown the cargo has begun to deteriorate - no liability the seller no longer had corn to sell as the contract was made

mccrae v commonwealth disposals commission 1951 - aussie

d invited tenders for the purchase of a wrecked tanker but later found there was no such tanker at the location provided by d - no mistake but breach of contract as contract existed

cm: mistake as to ownership - just case facts

[cooper v phibbs 1867]

c agreed to lease salmon fishery from p, both believed it belonged to p - turned out c could already enjoy fishery as life tenant

c had no need to take the lease and p had no power to grant it

contract set aside but p allowed compensation for money spent on the fishery

cm: mistake as to quality (3 +3 cases)

Mistake as to quality is generally not sufficiently fundamental to render the contract void

only mistake as to the existence of some quality which makes the thing without the quality essentially different [bell v lever brothers 1932]

must be a fundamental change to quality [leaf v international galleries 1950] / [great peace shipping v tsavliris (international) 2002]

bell v lever brothers 1932

bell’s contract of employment was terminated and given compensation but turned out bell had been in breach so contract could have been terminated without compensation

claimed mistake, rejected claim as the mistake was merely to the quality of the service contracts

leaf v international galleries 1950

p bought painting of salisbury cathedral for £85 believing it to be a constable

held only mistake as to the quality it was still a painting of the cathedral it did not change the fact the contract was performed

great peace shipping v tsavliris (international) 2002

d commissioned the great peace to salvage a ship 35 miles away from tgp but it was actually 410 miles away from them, d refused to pay and claimed mistake, ca held sitance did not constituite radically different

cm: common mistake in equity (1+case)

no equitable jurisdiction to set aside a contract not void for common mistake at common law [tsarvliris]