Mistake

Question 1

When will mistakes be recognised in law?

Answer 1

If they are fundamental or critical

Question 2

What are fundamental or critical mistakes called?

Answer 2

Operative mistakes

Question 3

What are the 4 types of mistake?

Answer 3

Common mistake, mutual mistake, unilateral mistake and mistake relating to document

Question 4

What is a common mistake?

Answer 4

A common mistake is one where both parties make the same error relating to a fundamental fact

Question 5

What 3 things are common mistakes categorised by?

Answer 5

res extincta

res sua

mistake as to quality

Question 6

What is res extincta?

Answer 6

A contract will be void at common law if the subject matter of the agreement is non-existent

s6 Sale of Goods Act 1979 - where specific goods have perished at time of contract, contract is void

Question 7

What is res sua?

Answer 7

A contract will be void when a person tries to buy something that is already theirs

Question 8

Will common mistake be allowed for quality?

Answer 8

No

Common mistake is only allowed where there has been a fundamental break in the contract - it will not allow mistake to be used where it is simply the quality or attributes which are destroyed

Question 9

Why do the courts ignore mistake as to quality?

Answer 9

Ignoring quality means that the courts will not allow parties to escape from ‘bad bargains’

Question 10

What is mutual mistake?

Answer 10

A mutual mistake occurs where both parties fail to understand one another

Question 11

What is the objective test used in determining mutual mistake?

Answer 11

Considering whether the reasonable man would interpret the agreement in favour of one party over another, deeming what they would understand terms to mean

Question 12

Mutual mistake

What will the results of the objective test determine?

Answer 12

If the test leads to the conclusion that the contract could be understood in one sense only,

Both parties will be bound by the contract under these terms

If the transaction is ambiguous under the test

There will be no consensual agreement and the contract will be void

Question 13

What is unilateral mistake?

Answer 13

Unilateral mistake occurs when only one party is mistaken

Question 14

In what 2 ways can unilateral mistake be categorised?

Answer 14

Mistake as to the terms of a contract and Mistake as to identity

Question 15

Unilateral Mistake

What is mistake as to terms of contract?

Answer 15

This occurs when one party is mistaken as to the nature of the contract and the other party is aware of the mistake. This, or the circumstances are such that they may be taken to be aware of it

This makes a contract void

Question 16

What is the test to determine whether a unilateral mistake is operative?

Answer 16

• One party is genuinely mistaken over a material detail. They would not have entered into the contract had they known
• The other party ought to reasonably have known of the mistake
• The party making the mistake was not at fault in any other way

Question 17

Unilateral Mistake

What is mistake as to identity?

Answer 17

This occurs when one party makes a contract with a second party, believing they are somebody else

Question 18

What two distinctions to the courts make for mistake by identity?

Answer 18

Contracts where parties are inter absentes and inter praesentes

Question 19

What does Inter Absentes mean?

Answer 19

Inter absentes means that the parties are not physically in each others presence

Question 20

When will inter absentes contracts be void for mistake?

Answer 20

• The parties are not physically in each others presence (eg online correspondence)
• One party is mistaken as to the identity of the other
• Where a party intends to deal with some identifiable third party and the other knows this

Question 21

What 2 conclusions may be drawn from inter ansentes contracts?

Answer 21

• To succeed in the case of mistake by identity, there must be an identifiable third party which whom one intended to contract
• The mistake must be as to identity and not attributes

Question 22

What does Inter Prasentes mean?

Answer 22

Inter praesentes means that the parties are face to face

Question 23

What is the presumption for Inter Praesentes contracts?

Answer 23

The mistaken party intends to deal with the person who is physically present and identifiable by sight and sound, regardless of the identity they assume

Question 24

For inter praesentes mistakes to be operative, what must the mistaken party show?

Answer 24

• They intended to deal with someone else
• The party they dealt with knew of this intention
• They regarded the identity as of crucial importance
• They took reasonable steps to check the identity of the other person

Question 25

What is mistake relating to documents?

Answer 25

As a general rule, a person is bound by their signature on a document whether or not they have read or understood the document itself.

Question 26

What is the exception to the general rule in mistake by document?

Answer 26

When someone has been induced to sign a contractual document on false pretences (fraud or misrepresentation). In this instance, the contract will be voidable

Question 27

Which case established the general rule for mistake by document?

Answer 27

L’Estrange v Graucob [1934]

Question 28

What does Non Est Factum mean?

Answer 28

It is not my deed

Question 29

Who does the plea of non est factum protect?

Answer 29

Non Est Factum was originally used to protect illiterate people who were tricked into signing documents, but now extends to literate people who sign a document believing it to be something other than it actually is

Question 30

Non Est Factum will only succeed when…

Answer 30

• The innocent party was suffering some weakness – e.g. blindness, senility and this was exploited by the other party
• The other party represented the document signed as being different from what it actually was
• The ‘weaker’ party took reasonable precautions before signing.

Question 31

What will an operative mistake do at common law?

Answer 31

Void the contract ab inito (from the start)

Question 32

Nemo Dat Quod Non Habet

Answer 32

You cannot give what you don’t own

Question 33

What does the nemo dat principle say?

Answer 33

If a non-owner sells goods, the purchaser will have no title to them

Question 34

What is the exception, found in the Factors Act 1889, to Nemo Dat?

Answer 34

Apparent owners may dispose of goods as if they were the true owner

Question 35

Courtier v Hastie [1856]

Answer 35

Facts: A contract was made to buy and sell corn on a ship. The parties were not aware that the corn had already been sold

Held: It was impossible to fulfil the contract from the start. The contract did not still exist

Question 36

Griffin v Brymer [1903]

Answer 36

Facts: A room was hired to celebrate a coronation. The coronation was cancelled by the time of the contract

Held: The contract was entered into on the assumption the coronation was happening. It was the sole purpose of the contract so the contract no longer existed

Question 37

Cooper v Phibbs [1867]

Answer 37

Facts: Cooper agreed to lease a fishery but neither party realised he already had the right to fish under his existing tenancy agreement

Held: You cannot receive what you already have

Question 38

Great Peace [2002]

Answer 38

Facts: A ship suffered structural damage. D offered a salvage service which was accepted. The Great Peace was the nearest salvage ship. They then entered a contract to engage The Great Peace to do the salvage work. TGP was actually further away at the time so D sought a closer ship, and cancelled TGP. TGP refused to cancel and brought an action for breach

Held: At common law the mistake did not render the contract essentially different from that which it was believed to be.

Question 39

Bell v Lever Bros [1932]

Answer 39

Facts: A contract of employment was to run for 5 years but poor performance led to a merger, making Bell redundant. Bell was paid but Lever Bros later realised they had breached duty, which would have entitled Lever Bros to end the contract without notice or compensation. They brought an action for mistake

Held: There was only a mistake as to quality, which did not render the contract essentially different from what it was believed to be

Question 40

Raffles v Wichelhaus [1864]

Answer 40

Facts: Two parties were negotiating a contract where delivery would be made to a named ship. 2 ships had that name, and each party believed it would be sent to different ones

Held: The parties were not talking about the same ship, so they were not at consensus. The contract was void

Question 41

Scriven Bros v Hindley [1913]

Answer 41

Facts: C placed separate items into auction but they were similarly packaged. Hindley thought he was buying 2 of the same item but when he found out they were different, he refused to pay

Held: The parties were not at consensus. The contract was void

Question 42

Smith v Hughes [1871]

Answer 42

Facts: S buyer wanted to purchase oats for horse feed so the oats needed to be old. They were new

Held: The mistake was regarding quality. The fundamental purpose was satisfied

Question 43

Hartog v Colin & Shields [1939]

Answer 43

Facts: The parties were negotiating the sale of animal skins. The custom is to sell skin per piece. By mistake, the seller made an offer based on weight which made the cost less than it should be. The buyer was aware of the mistake and still sought to enforce the sale

Held: The buyer took advantage of the seller’s mistake so there was no consensus

Question 44

Cundy v Lindsay [1878]

Answer 44

Facts: A rogue created a company operating from 37 Wood Street called Blenkarn. They placed an order with Lindsay singing it as such. On the basis of this company, L supplied goods on credit and the rogue sold them to Cundy

Held: Lindsay intended to sell to Blenkarn, not the rogue so good title was not passed. Cundy had to return the goods

Question 45

Kings Norton Metal Co v Edridge Merrett Co [1897]

Answer 45

Facts: A rogue traded under a business name and contracted for wire sold by Kings. He never paid and sold the wire to Edridge Merrett. Under untilateral mistake, Kings attempted to recover the wire

Held: Kings intended to contract with the rogue but the mistake was in relation to his credit worthiness and was not the fundamental purpose of the contract

Question 46

Phillips v Brooks [1919]

Answer 46

Facts: A rogue pretended to be someone and wrote a cheque for a ring priced £3000 to Phillips. Phillips checked the rogue’s address and allowed him to take the ring before the cheque had cleared. The rogue sold the ring and vanished

Held: Phillips intended to contract with the person in front of him regardless of actual identity. Good title had passed to the rogue

Question 47

Lewis v Avery [1972]

Answer 47

Facts: A rogue claimed he was a famous actor and wanted to buy a car. He produced a studio pass showing his false identity and photo. Lewis accepted a cheque and gave the car to the rogue before the cheque bounced. The car was sold to Avery

Held: Lewis intended to contract with the person in front of him, regardless of identity

Question 48

Saunders v Anglia Building Society [1971]

Answer 48

Facts: Saunders wanted to transfer her property into her nephew’s name but still reside there. The nephew’s friend transferred the property into his own name to borrow against the property, refusing to pay the building society back. Possession of the house was sought and Saunders claimed Non Est Factum

Held: The document she signed was not legally different from the one she wanted to sign. She did not adequately check the document