CL: 10 & 11 Mistake & Illegality Flashcards
Operative Mistake
A mistake which is recognised in law of contract as preventing a contract taking legal effect,
Contract is void - nullity from its beginning - void ab initio
Void
No legal effect from the outset
At the heart of the concept of the mistake
Parties have not truly reached an agreement;
Either the parties cannot be said to have reached agreement because of the mistake
Mistake makes contract something other than intended
Categories of mistake
1) Common Mistake
2) Mutual Mistake
3) Unilateral Mistake
Common Mistake
… occurs where both parties to an agreement are suffering from the same misapprehension.
Consider whether the underlying common mistake is sufficiently fundamental to affect the validity of the contract.
Mutual Mistake
Occurs where both parties are mistaken but they are mistaken about different things.
In other words, they have negotiated at cross-purposes
Unilateral Mistake
Occurs where only one party is mistaken and the other party knows, or is deemed to know, of the mistake
Common mistake about quality of goods
In absence of contractual misdescription, mistake about quality does not void the contract.
Even if affects utility or value of goods
Limited category where mistake is so severe contract would be void for mistake as to quality.
- Test unclear
- “essentially different” or “radically different” subject matter
- Mistake renders assumed performance “impossible”
Bell v Lever Brothers [1932]
Bell v Lever Brothers 1932
Leaf v International Galleries 1950
Painting - constable
Circumstances where common mistake will not operate
- The mistake is not sufficiently fundamental
- One party is at fault
- Contract makes provision for the issue
Mutual mistake
Both parties are mistaken about different things, they have negotiated at cross purposes.
What is the objective test employed in determining if a mutual mistake has been made?
What a reasonable third party would believe the agreement to be based on the words and conduct o the parties.
What may be decided following an objective test for a mutual mistake
- How the agreement is
- No meaning at all
- Binding if reasonable person infers contract
Unilateral Mistake
One party is mistaken and other party knows/is deemed to know.
Acceptance does not correspond with the offer - no real agreement reached
Hartog v Colin Shields 1939
Defendant could not take up an offer when aware that party had made a mistake as to the offer terms
Unilateral mistake as to the expression of intention
Offeror makes a material mistake in expressing their intention, and the other party knows, or is deemed to know, of the error, the mistake is likely to lead to the contract being void.
Hartog v Colin & SHields 1939
Unilateral mistake as to the nature of document signed
Exception to the general rule.
Mistaken belief as to the nature of the document.
Defence of: non est factum (“It is not my deed”)
L’Estrange v Graucob 1934
Bound by terms if they did not read or understand its contents
General rule
Non Est factum available when mistake is due to:
- Blindness, illiteracy, or senility
- A trick or fradulent misrepresentation as to the nature of the document, providing that all reasonable precautions were taken
Thoroughgood’s Case 1584
- Illiterate woman
- Deed signed believing it regarded arrears of rent.
- Was actually releasing a claim the woman had over another man.
- Held to be a nullity
Unilateral mistake as to the identity of the person contracted with.
Contract with a party who is not who the other party pretends to be.
Whether or not a contract is void depends on the precise circumstances
Common mistake as to the existence of the subject matter
- Void, unless contract impliedly /expressly allocates this risk
