Contract - Mistake Flashcards
What are the categories of mistake?
- Unilateral mistake
- Unilateral mistake as to identity
- Mutual mistake
- Common mistake
What is an operative mistake?
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
The Hannah Blumenthal
The actual intention of the party doesn’t matter, but rather what was communicated
What is a common mistake?
A mistake shared by two parties
Res extincta (incl. case)
Mistake as to the subject matter of the contract (Coutrier v Hastie)
McRae v Commonwealth Disposals (common mistake)
If one party knows or has taken the risk then it cannot be a common mistake
Res sua (incl. case)
Mistake as to the title of the contract i.e. ownership (Cooper v Phibbs)
Common mistake as to the terms of the contract
It must be a ‘mistake of both parties’ and a mistake about ‘existence of some quality’ (Bell v Lever Bros)
The Great Peace Shipping (common mistake)
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
Mutual mistake (incl. case)
Both parties have made a mistake but not about the same thing; makes the contract unenforceable (Raffles v Wichelhaus)
Unilateral mistake
One party has made a mistake and the other party knows about the existence of the mistake
Unilateral mistake as to quality (incl. case)
Objectivity prevails’ what a reasonable man would believe that he was assenting to the terms proposed (Smith v Hughes)
Unilateral mistake as to terms (incl. case)
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)
Hartog v Colins, Chwee Kin Keong v Digilandmail (unilateral mistake)
The court will allow a mistake if ‘the plaintiff could not reasonably have supposed that the offer contained the offeror’s real intention’
Centrovincial Estates v Merchant Investors, Ulster Bank v Lambe, Olympia Sauna Shipping (unilateral mistake)
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
Statoil ASA v Louis
Calculation errors are limited to the terms of the contract
What is the effect of mistake?
Renders the contract void
What is unilateral mistake as to identity?
One party is mistaken as to the identity of the other party and this other party knows of it
Shogun Finance v Hudson
A genuine mistake as to the identity of the other party to the contract renders the contract void
King’s Norton Metal Co v Edridge (MATI)
Distinction between identity and attributes; if there was a mistake as to the attributes, the contract is intact and still enforceable
Face to face principle (Lewis v Avery)
when there has been F2F contact between parties there is a strong presumption that each party intends to contract with the other person present
What is the effect of unilateral mistake as to identity?
Renders the contract voidable
