contract law mistake Flashcards
Couturier v Hastie (1856)
Contract void for common mistake—subject matter didn’t exist. Sale of corn believed to be in transit, but it had already spoiled and been sold.
McRae v Commonwealth Disposals Commission (1951)
No mistake—seller assumed responsibility for existence. Commission sold a non-existent shipwreck. and guaranteed it too
Bell v Lever Bros [1932] AC 161
Executives paid redundancy, later found to have breached duties. No operative mistake—contract binding despite later discovery.
The Great Peace Shipping Ltd v Tsavliris Salvage [2002] EWCA Civ 1407
Charterers hired ship for rescue, but another closer ship existed. No common mistake—contract not fundamentally different. Performance still possible
Hartog v Colin & Shields [1939] 3 All ER 566 -
Seller’s price quote was mistakenly per pound instead of per piece. Buyer knew of mistake—no contract formed. no consensus ad idem (meeting of the minds)
Cundy v Lindsay (1878) 3 App Cas 459 -
Fraudster Blenkarn ordered goods, pretending to be a reputable firm. No contract—identity mistake meant no consent.
Kings Norton Metal Co v Edridge, Merrett & Co (1897) 14 TLR 98 -
Fraudster Wallis ordered goods under a fake company name. Contract valid—mistake was only about creditworthiness.
Phillips v Brooks Ltd [1919] 2 KB 243 -
Fraudster impersonated a wealthy customer to buy jewelry. Contract valid—mistake was about attributes, not identity.
Ingram v Little [1961] 1 QB 31 -
Fraudster pretended to be someone else to buy a car. Contract void—identity was crucial.
Lewis v Averay [1972] 1 QB 198 - Facts
Fraudster posed as a famous actor to buy a car. Contract valid—mistake was about creditworthiness, not identity.
Raffles v Wichelhaus - Rationale
Absence of genuine agreement, common mistake.
Cooper v Phibbs - Rationale
Contract voidable due to fundamental mistake about ownership.
AJB v Du Nord - Rationale
Mistake about quality and reliance.
Smith v Hughes - Rationale
Objective test remains binding; silence is not misrepresentation.
Shogun Finance - Rationale
Void for ownership; cost borne by vendor if contract is good.
Trustees v Yardley - Rationale
Fundamentally misunderstood, non est factum.
Solle v Butcher - Rationale
Principle (Denning LJ):
There is a distinction between common law mistake (which makes a contract void) and equitable mistake (which makes a contract voidable).
A contract can be rescinded in equity if both parties are mistaken about a fundamental fact, and it would be unjust to enforce the contract.
Status:
The authority of Solle v Butcher was significantly limited by the House of Lords in Great Peace Shipping Ltd v Tsavliris Salvage (2002), where it was held that there is no separate doctrine of equitable mistake—only common law mistake remains valid.
Chartbrook - Rationale
Common law rectification. Under the modern approach to contractual interpretation, the court:
Focuses on the objective meaning a reasonable person would give to the contract.
Can correct a clear drafting mistake if:
The language is ambiguous or absurd, and
The intended meaning is objectively clear from the context.
This is interpretation, not rectification, so no formal claim for rectification is needed.
