Contract Law -> Vitiation 1: Mistake Flashcards
What is an operative mistake
An operative mistake is a mistake that is so serious it invalidates the contract and makes it have no legal effect
Describe “Mistake as to the subject matter”
This is where two or more parties enter a contract under the assumption that the subject matter exists where in reality it does not exist.
Case law for mistakes as to the subject matter
Courtier v Hastie [1856]
Court held contract as void - Contracted subject matter already did not exist by the time of making the contract. (Contracted to buy corn however it perished on the way there)
Describe “Mistake as to the title”
This occurs when somebody contracts to buy something that already belongs to them.
Case law for mistakes as to the title
Cooper v Phibbs [1867]
Court held contract as void - Contracted to lease fishery that Cooper already owned after the death of his uncle (Uncle gave it to him in his will)
Describe “Mistake as to the quality”
When the quality of the subject matter changes essentially from what it was originally supposed to be
Case law for mistakes as to the quality
Associated Japanese Bank v Credit Du Nord SA [1989]
Court held contract as void - Japanese bank bought 3 machines from a client. They leased the machines back to the client with a guarantee from Credit du Nord. The client failed to keep up with lease payments and gone bankrupt. Upon further investigation, the machines never existed.
The subject matter changed “Essentially” from what they believed it to be initially.
Types of unilateral mistakes
- Mistake as to terms of contract (Smith v Hughes)
- Mistake as to identity of person contracted with (Cundy v Lindsay)
- Mistake as to the Nature of the document signed - Galle v Lee
