Common Mistake and frustration Flashcards
In which situation does a common mistake occur?
Where the common misapprehension is present at the date of the contract
In which situation does frustration occur?
Where the event happens after contracting, rendering performance impossible, illegal or radically different from that which was in the contemplation at the the time they contracted
Amalgamated Investment and property v John Walker
-Property advertised as being suitable for occupation
- Building was shortly listed as a historic building
- C argued that the contract should be set aside for common mistake/frustration
- CA- C taken on the risk evidenced by their pre contract enquiries
Bell v Lever Brothers
- Contracted with C as chairman/vice chairman
- Terms- included that they were not to make private profits. Contrary to this D had engaged in business on their own accounts
- C wished to terminate D on account of a business reorganisation
- C & D entered into compensation agreements
- C discovered D was in breach of their service agreements, a breach of which would have entitled termination of the contracts without compensation
- C could not recover the money as they could not escape from a bad bargain
What is a common mistake?
Where the mistake is common to both parties, the parties had reached agreement, but the agreement is based on a fundamental mistaken assumption
What was the test for common mistake, as set out in Bell v Lever Brothers
A common mistake must relate to something which both parties have accepted in their minds as an essential element on the subject matter
What protects consumers where the goods were non-existent in a contract?
s6 Sale of Goods Act
What does the SGA stipulate?
Where there is a contract for the sale of goods and the goods without the knowledge of the seller have perished at the time the contract was made, the contract is voidq
Galloway v Galloway
D, assuming his wife to be dead, married C
D and C separated, to which D agreed to pay C a weekly allowance
D discovered his wife was alive and fell into arrears
C sued to recover the arrears but was unable to do so- the separation agreement was void on the grounds that it was entered into under the common mistake that they were married
Davis v Fareham
ACTS: The Ps agreed to build council houses for D council in eight months. The work took 22 months and the Ps argued that the contract was frustrated by the long delay, which was due to a severe manpower and materials shortage.
HELD: The contract had not been frustrated. Lord Radcliffe: ‘It is not hardship or inconvenience or material loss itself which calls the principle of frustration into play. There must be as well such a change in the significance of the obligation that the thing undertaken would, if performed, be a [radically] different thing from that contracted for.’
Couturier v Hastie
-C and D contracted for corn
- Before the contract was made, and unknown to the parties, the corn had deteriorated to such an extent that the ship master sold the corn.
- The existence of the subject matter (corn) = a failure of consideration meaning the buyer did not have to pay the price
Leaf v International Galleries
Misrepresentation as to the author of a painting was not enough to set a contract aside
Sheikh Brothers v Oschsner
C granted a licence to D to enter and cut sisal growing on their land
C agreed to deliver 50 tons on cut sisal/month
The land was incapable of producing 50 tons of sisal/month
Contract was held to be void, the mistake related to a matter essential to the agreement
Great peace shipping v Tsavliris Savage
D agreed to provide salvage services for a vessel that had undergoing issues.
D agreed to hire GP under the assumption that it was close to the vessel.
GP was not as close to the vessel as D believed.
The mistake was held as not sufficiently fundamental as to set aside the contract.
Davies Contractors v Fareham
C agreed to build 78 houses for D
Work was schedules for 8 months, but took 14 months which resulted in an increase of costs
C sought to recover the costs, argued that the contract was frustrated
No claim for frustration from a bad bargain
