Mistake. Flashcards
What are the two types of mistake?
1)Parties made a mistake in communicating with each other.
2) Parties successfully communicated their intentions but under the common mistake of fact.
What is an example for the first type of mistake?
The buyer thought he was buying old (therefore better quality) oats but the seller said the contract was for new (less valuable) oats (Smith v Hughes (1871).
These are called unilateral mistake cases.
What is an example of the second type of mistake?
See The Great Peace case.
These are common mistake cases.
What actions can the court take for mistakes of communication?
-The courts can choose to do nothing, rather binding them to what they appeared to say, rather than what they actually intended.
-A party should not be bound unless their intentions were properly communicated with the other party.
-There are certain (limited) circumstances where the courts will refuse to enforce the objective agreement when it diverges from a party’s subjective intention and we can say that there is no agreement or (which amounts to the same thing) that the contract is void.
What are void contracts?
Void contracts are not contracts at all: they have never amounted to a contract and they never will. ‘Void’ is a label used by the court to signify that the issue of whether there was a contract was in dispute but, on the facts, there was no contract.
What can the courts do for mistakes of fact?
○ The courts could elect to enforce all contracts, regardless of how many misapprehensions the parties shared.
○ However, in exceptional cases the parties’ consent is affected when they both operate under such a major misapprehension as to the true facts that the performance of the essence of the contract as envisaged by both of them is impossible. This will be labelled as void.
What must the courts first do before determining whether a mistake was made?
They must first identify the terms of the objective contract.
What agreement did the parties appear to make?
This is key in deciding whether it was a mistake by communication.
What if a mistake was known to the other party?
This cannot be relied upon.
What is key for the parties to show to the court?
Must show to the court that you were mistaken and that the other party knew of your mistake.
What can the courts sometimes do in terms of the objective agreement?
In some cases it is enough for the courts to simply refuse the claimant’s request to enforce the objective agreement and there was no need to decide whether there was any other valid agreement on different terms.
What do cases on mistaken identity usually involve?
A rogue (someone who pretends to be someone else).
What does a rogue usually do?
They persuade the owner of the goods to sell this possession. The rogue then sells the goods to a third party and disappears. This means that when the seller realises the rogue was a fraud (the cheque bounces), the rogue cannot be tracked down, so the owner seeks to claim from the third party.
What happens when the contract is void with the rogue?
Not only did the owner not consent to an agreement with the rogue, but also that the owner did not consent to transfer title of goods to the rogue.
The rogue therefore does not acquire the goods and, if the rogue has no title to the goods, no title can be transferred to the third party (the rogue cannot pass on what the rogue has never received).
What can the owner do for a solution, when the contract with rogue is void?
The owner can have the third party give the goods back to them or may claim the value of the goods instead of the actual goods themselves.
What does ‘title’ mean?
It is sufficient to imagine title as the ultimate and most powerful property rights over goods; whoever holds these property rights is the owner of the goods and can prevent anyone from interfering with his goods.
