Contract - Mistake Flashcards
Couturier v Hastie
Contract void by common mistake when the item physically or commercially ceases to exist
Fermented corn
Encapsulated in s6 SGA
Raffles v Wichelhaus
Defined different types of mistake
COMMON - sank on “high seas”
MUTUAL - two ships with the same name (The Peerless). Minds of parties in fact are subjectively directerd to a different object. Offer and acceptance do not therefore coincide. (as in this case)
UNILATERAL - no such ship
McRae v Commonwealth Disposals Commission
Where impliedly promised that the subject matter existed - breach of contract (warranty) so liable in damages
Leaf v International Galleries
Common mistake can never render a contract void when regarding the quality of the subject matter.
Based on Bell v Lever Bros Ltd
Bell v Lever Bros Ltd
- received compensation package when already in breach
- not void for common mistake as issue of quality
NARROW INTERPRETATION
Identity of subject matter must be destroyed to nullify agreement
WIDE INTERPRETATION
The mistaken quality of the subject matter must render the thing without it “essentially and radically different” to make the contract void.
(Support for wide - Steyn J in Associated Japanese Bank Ltd v Credit du Nord SA)
Great Peace Shipping Ltd v Tsavliris
Defence of common mistake only available when it is impossible for the contract to be performed.
Services must be rendered “essentially different” from what the parties agreed.
Lord Phillips “On true construction of the contract neither party has undertaken responsibility for subsistence of the assumed state of affairs and neither party is at fault and performance is impossible - then common mistake possible”.
Hartog v Colin & Shields
Unilateral mistake when regarding
- a fundamental term of the contract
- the other party must have realised the mistake
(sale of hare skins, one third of true value)
Cundy v Lindsay
When parties are not in each other’s presence - identity is held to be crucial
- contract void for unilateral mistake and title of goods remains with seller
“with him they never intended to deal” Lord Cains
Phillips v Brooks Ltd
In face-to-face contracts
- not void for mistake if based on attributes (eg credit-worthiness). Doing little to check identity of person.
- may be voidable for fraudulent misrepresentation
- if title is acquired in good faith by a third party before contract set aside, then passes to them.
Lewis v Averay
A presumption that a person intends to deal with the person before him as identified by sight and hearing. Therefore face to face contracts presumed only voidable for fraud.
Ingram v Little
Evidence that face to face contracts may be void for mistake if based on identity
Was held that identity was of crucial importance - ie. verified identity and altered actions of seller.
Heavily criticised.
“A mistake as to attributes is not enough but a mistake as to identy will render the contract void for unilateral mistake [for face-to-face dealings]”. (often said)
Shogun Finance Ltd v Hudson
Written/face to face hire purchase
Contract was void and third party did not obtain title
Intended to deal with person named in written document - identity was therefore crucial
Other party knew of the mistake
Proper steps were taken to verify the identity of the other party.
Saunders v Anglia Building Society (or Gallie v Lee)
Widow transferred house to nephew.
Transaction held not fundamentally different from what she intended
Had been careless in sighning the document.
= Non est factum could not be raised as a defence
(Has been raised successfully by illiterate claimant in Lloyds BAnk plc v Waterhouse).
Craddock Brothers v Hunt
Courts may rectify written contracts to bring into line with oral agreements made.
Frederick E Rose Ltd v William H Pim & Co
Rectification of written contract refused where correctly recorded what was orally agreed even if there was a mistake in the minds of the parties at the time
Denning LJ “rectification is not concerned with intentions…necessary to show parties were in complete agreement on the terms of their contract but in error wrote them down wrongly”.
