Mistake Flashcards
When will a mistake render a contract void?
When it is in an operative mistake
What is an operative mistake?
An operative mistake is one which prevents a contract from taking legal effect
What is the consequence of contract being void?
It was never formed and had no legal effect.
Why does an operative mistake make a contract void?
As fundamentally due to the mistake the parties never reached agreement
What are the three categories of mistake?
- common mistake
- mutual mistake
- unilateral mistake
What is common mistake?
Common mistake is where both parties to an agreement are suffering from the same misapprehension
When will a common mistake result in a contract being void?
If it is sufficiently fundamental to affect the validity of the contract
Will mistake about the quality of the goods make a contract void for common mistake?
No - not sufficiently fundamental
Under what circumstances will a common mistake not operate to make the contract void?
- the mistake is not sufficiently fundamental
- one party is at fault
- the contract makes provision for the issue
What is mutual mistake?
Mutual mistake is where both parties are mistaken but they are mistaken about different things - they have negotiated at cross purposes
How will the court determine if the mutual mistake is an operative mistake that will make the contract void?
Apply objective test - what would a reasonable party believe the agreement to be, based on the words and conduct of the parties
When will a mutual mistake amount to an operative mistake rendering the contract void?
If a reasonable person would infer that no meaning can be attributed to the agreement at all
Otherwise agreement binding on both parties even if mutual mistake
What is a unilateral mistake?
Occurs only where one party is mistaken and the other party knows, or is deemed to know, of the mistake
What is the effect if the unilateral mistake was to do with expression of intention?
Where the offeror makes a mistake in expressing their intention, and the other party knows, or is deemed to know, of the error, the mistake is likely to lead to the contract being void
What is the effect if the unilateral mistake was do with the nature of the document signed?
General rule is person bound by any document they sign, whether or not they read the terms.
Exception - may not bound where they sign under mistaken belief as to the nature of the document.
When is the defence that a person mistakenly signed a document/deed likely available?
If the mistake was due to:
- blindness, illiteracy or senility of the person signing
- a trick or fraudulent misrepresentation as to the nature of the document, provided that person took all reasonable precautions before signing
When will unilateral mistake in relation to mistaken identity mean the contract is void?
If the person seeking to rely on mistake is able to establish that identity rather than attribute was of vital importance.
What is the difference if the mistake is due to attribute rather than identity?
If mistake down to attribute then contract may be voidable due to misrepresentation
If mistake is down to identity, then contract is voidable
What is the effect of the contract being void or voidable and recovering property?
Person will always be able to recover property from a third party under void contract as transfer had no legal effect
Person will only be able to recover property from the other party to the contract but not a third party who is in good faith and pays a price for them
In what situations are the courts more likely to find a mistake as to identity?
If the contract was not face to face but a distance selling transaction whereby the party was thought they were dealing with one person at a. distance rather than face to face
