Topic 6 - Mistake Flashcards
(35 cards)
What is the narrower meaning of ‘mistake’ in contract law?
‘Mistake’ in contract law refers to an ‘operative’ mistake that can render a contract void ab initio.
‘Void ab initio’ means that the contract is null from the beginning.
What is the difference between a ‘void’ contract and a ‘voidable’ contract?
‘Void’ means the contract has no legal effect from the outset, while ‘voidable’ means the contract can be ended but remains in force until that happens.
Define ‘operative mistake’.
‘Operative mistake’ is a mistake recognized in contract law that prevents a contract from having legal effect, making it void from the outset.
What are the three categories of mistake in contract law?
- Common Mistake
- Mutual Mistake
- Unilateral Mistake
What is a ‘common mistake’?
A common mistake occurs where both parties to an agreement are suffering from the same misapprehension.
Provide an example of a common mistake.
Both parties believe the subject-matter of the contract is in existence, but it has been destroyed prior to the contract.
What is a ‘mutual mistake’?
A mutual mistake occurs where both parties are mistaken but about different things, negotiating at cross purposes.
Provide an example of a mutual mistake.
A agrees to sell a horse thinking it is a chestnut horse, while B believes it is a grey horse.
What does the court employ to determine mutual mistake?
The court employs an objective test to determine what a reasonable third party would believe the agreement to be.
What is a ‘unilateral mistake’?
A unilateral mistake occurs where only one party is mistaken, and the other party knows or is deemed to know of the mistake.
What happens when a unilateral mistake occurs?
The acceptance does not correspond with the offer, resulting in no real agreement reached.
What is the general rule regarding documents signed?
A person is bound by the terms of any instrument they sign, even if they did not read or understand it.
What is the exception to the general rule of signing documents?
A person may raise the defence of non est factum if they signed under a mistaken belief about the document’s nature.
What is ‘unilateral mistake as to identity’?
This occurs when one party mistakenly believes they are contracting with a person that the other party is pretending to be.
What is the key case for unilateral mistake as to identity?
Lewis v Averay [1972] 1 QB 198.
What was the outcome in Lewis v Averay regarding the fraudster’s identity?
The court held that the contract was voidable for misrepresentation, not void for mistake, as identity was not deemed of ‘vital importance’.
What is the significance of whether a contract is void for mistake or voidable for misrepresentation?
If void for mistake, the contract is null from the beginning; if voidable for misrepresentation, the title may still pass until the contract is avoided.
Fill in the blank: A contract is void if the mistake is about _______.
identity.
What is the principle of nemo dat quod non habet?
No one gives who possesses not; you cannot give what you do not have.
In a case where the buyer’s identity is fundamental and the contract is void for mistake, what is the status of the contract?
It is void and ineffective from the outset.
What must the third party do if they have no title to the goods?
Return the goods to the duped seller.
In Lewis v Averay, what type of contracting situation was considered?
Face to face contracting.
What was the key issue in Cundy v Lindsay (1878)?
Mistake as to the identity of the contracting party.
