Mistake

Question 1

What is a unilateral mistake in contract law?

Answer 1

A unilateral mistake occurs when one party is mistaken about a term or aspect of the contract, and the other party may or may not be aware of it. The court assesses if the mistake undermines consent and if it affects the agreement

Question 2

What are the 3 key principles of unilateral mistake?

Answer 2

1. Contracts require mutual agreement (consensus ad idem). A mistake may invalidate the contract
2. Mistakes can involve terms, identity, or the subject matter
3. The court considers whether the mistake is material and if it would be apparent to a reasonable person

Question 3

What is the rule in Smith v Hughes (1871)?

Answer 3

The case ruled that the defendant’s mistake about the type of oats was their own fault. The seller was not liable unless they made an express warranty or fraudulent representation. Caveat emptor (buyer beware) applied

Question 4

What is a mistake as to identity?

Answer 4

It occurs when one party is misled about the identity of the other party, leading to potential issues of fraud or misunderstanding in the contract

Question 5

What is the key principle in Phillips v Brooks Ltd (1919)?

Answer 5

In face-to-face transactions, the seller is presumed to contract with the person present, even if the person uses a false identity. The contract is voidable, not void

Question 6

What does “Caveat Emptor” mean?

Answer 6

It means “buyer beware,” where the buyer must inspect goods and cannot rely on the seller’s silence unless there is a warranty or misrepresentation

Question 7

What does “Caveat Venditor” mean?

Answer 7

It means “seller beware,” where the seller assumes the risk of verifying the buyer’s identity in face-to-face transactions

Question 8

What is the “reasonable person standard” in unilateral mistake cases?

Answer 8

Courts evaluate the case based on what a hypothetical reasonable person would have understood in the circumstances

Question 9

What is the difference between void and voidable contracts?

Answer 9

Void: The contract never existed; no property rights pass

Voidable: The contract exists but can be rescinded if action is taken before third-party rights are established

Question 10

How do face-to-face and correspondence transactions differ in unilateral mistake cases?

Answer 10

• In face-to-face transactions, the contract is voidable, and the seller assumes the risk
• In correspondence transactions, the contract is void if a mistake in identity is made