Week 19 Contract: Mistake

What is an "operative" mistake in contract law?

A mistake is "operative" if it is sufficiently serious to justify the court’s intervention.

Why are courts cautious about setting contracts aside for mistake?

To maintain contractual certainty and prevent abuse (e.g., "Sorry, I made a mistake").

What is concurrent liability?

It refers to situations where a factual issue engages multiple legal areas (e.g., misrepresentation, mistake, statutory terms).

What are the three types of mistake in contract law?

(1) Unilateral, (2) Mutual, (3) Common.

What is the general rule for unilateral mistake?

A contract may be void if one party is mistaken and the other party knows or ought to know of the mistake.

What is "non est factum"?

A defense used when someone is misled into signing a document fundamentally different from what they intended.

What happened in Hartog v Colin & Shields?

A pricing mistake in the offer (price per pound instead of per piece) was exploited, but the court voided the contract because the mistake was obvious.

What must the mistake relate to for a contract to be void?

The identity of the other party, not merely their attributes.

What was decided in Boulton v Jones?

The court found that identity was crucial due to past dealings with the intended party.

What did Cundy v Lindsay establish?

A contract is void if the seller intended to deal with a specific, known person, not the rogue.

Contrast Kings Norton Metal with Cundy v Lindsay.

In Kings Norton, the contract was not void for mistake because the identity was not crucial and the "company" never existed.

What's the distinction between inter praesentes and inter absentes contracts?

Face-to-face (inter praesentes): identity usually less important; Distance contracts (inter absentes): identity may be crucial.

How did Phillips v Brooks and Lewis v Avery treat face-to-face mistaken identity?

Held that the seller intended to deal with the person present, making contracts valid despite mistaken identity.

What was unique about Ingram v Little?

The court upheld the mistake as to identity due to the seller’s explicit verification efforts.

What was the ruling in Shogun Finance v Hudson?

The contract was void due to mistaken identity in a written (inter absentes) contract.

What defines mutual mistake?

Both parties misunderstand each other and are at cross-purposes on the terms.

What did Raffles v Wichelhaus demonstrate?

No binding contract where mutual mistake made agreement uncertain (two ships named “Peerless”).

How did Smith v Hughes contrast with Raffles?

Buyer’s mistake about the oats wasn’t shared or induced—no operative mistake.

What is a common mistake?

Both parties make the same mistake about a fundamental fact.

What are the two main types of common mistake?

(1) As to existence of subject matter; (2) As to essential quality.

What happened in Courturier v Hastie?

Contract was void because the corn had already perished—res extincta

What was decided in McRae v CDC?

Contract not void because one party had warranted the existence of the tanker.

What’s the significance of Bell v Lever Bros?

Mistake must make the subject "essentially different" to void a contract—narrow scope.

How did Oscar Chess v Williams treat mistaken quality?

Mistake about car's model year was not sufficiently fundamental to void contract.

What was ruled in Leaf v International Galleries?

The painting’s authorship was not essential to the contract—no void for mistake.

What did Associated Japanese Bank v Credit du Nord establish?

Mistake about non-existent machines voided the guarantee contract—essential difference.

What did the Great Peace case clarify?

Even where performance is less useful, if it’s still possible, common mistake won’t void a contract.