Contract - Mistake

Question 1

What are the categories of mistake?

Answer 1

• Unilateral mistake
• Unilateral mistake as to identity
• Mutual mistake
• Common mistake

Question 2

What is an operative mistake?

Answer 2

mistake of fact so fundamental that it either:
- prevents the formation of a contract
- makes the contract something fundamentally different to that which was originally intended

Question 3

The Hannah Blumenthal

Answer 3

The actual intention of the party doesn’t matter, but rather what was communicated

Question 4

What is a common mistake?

Answer 4

A mistake shared by two parties

Question 5

Res extincta (incl. case)

Answer 5

Mistake as to the subject matter of the contract (Coutrier v Hastie)

Question 6

McRae v Commonwealth Disposals (common mistake)

Answer 6

If one party knows or has taken the risk then it cannot be a common mistake

Question 7

Res sua (incl. case)

Answer 7

Mistake as to the title of the contract i.e. ownership (Cooper v Phibbs)

Question 8

Common mistake as to the terms of the contract

Answer 8

It must be a ‘mistake of both parties’ and a mistake about ‘existence of some quality’ (Bell v Lever Bros)

Question 9

The Great Peace Shipping (common mistake)

Answer 9

Common mistake requires an element to make the contract performance impossible
- A matter of quality e.g. distance does not make the contract impossible to perform

Question 10

Mutual mistake (incl. case)

Answer 10

Both parties have made a mistake but not about the same thing; makes the contract unenforceable (Raffles v Wichelhaus)

Question 11

Unilateral mistake

Answer 11

One party has made a mistake and the other party knows about the existence of the mistake

Question 12

Unilateral mistake as to quality (incl. case)

Answer 12

Objectivity prevails’ what a reasonable man would believe that he was assenting to the terms proposed (Smith v Hughes)

Question 13

Unilateral mistake as to terms (incl. case)

Answer 13

Even if the other party is aware of this mistake this wouldn’t matter; can’t just claim a mistake because of a bad bargain (Tamplin v James)

Question 14

Hartog v Colins, Chwee Kin Keong v Digilandmail (unilateral mistake)

Answer 14

The court will allow a mistake if ‘the plaintiff could not reasonably have supposed that the offer contained the offeror’s real intention’

Question 15

Centrovincial Estates v Merchant Investors, Ulster Bank v Lambe, Olympia Sauna Shipping (unilateral mistake)

Answer 15

For a contract to be void to unilateral mistakes as to term to contract, D must have known or ought to have known of C’s mistake

Question 16

Statoil ASA v Louis

Answer 16

Calculation errors are limited to the terms of the contract

Question 17

What is the effect of mistake?

Answer 17

Renders the contract void

Question 18

What is unilateral mistake as to identity?

Answer 18

One party is mistaken as to the identity of the other party and this other party knows of it

Question 19

Shogun Finance v Hudson

Answer 19

A genuine mistake as to the identity of the other party to the contract renders the contract void

Question 20

King’s Norton Metal Co v Edridge (MATI)

Answer 20

Distinction between identity and attributes; if there was a mistake as to the attributes, the contract is intact and still enforceable

Question 21

Face to face principle (Lewis v Avery)

Answer 21

when there has been F2F contact between parties there is a strong presumption that each party intends to contract with the other person present

Question 22

What is the effect of unilateral mistake as to identity?

Answer 22

Renders the contract voidable