Mistake Flashcards
Types of mistake
1- common mistake
2- mutual mistake
3- unilateral mistake
Consequence of mistake
(subject to exceptions)
VOID
Common mistake can exist as to:
1- existence of the subject matter
2- subject being owned by the buyer
3- a fact or quality fundamental to the agreement
Consequences for common mistake
1- existence of the subject matter
=> void, unless contract allocates the risk
2- subject being owned by the buyer
=> void
3- a fact or quality fundamental to the agreement
=> void only in the most severe instances of mistake
Mutual mistake can occur as to
the identity of the subject matter
==> VOID
Unilateral mistake can occur as to
1- the expression of intention
2- the nature of the doc signed
3- identity of the person contracted with
Consequences for unilateral mistake
1- the expression of intention
=> void
2- the nature of the doc signed
=> void if the mistake is due to blindless, illiteracy, senility or fraud
3- identity of the person contracted with
=> void, but very hard to show in face to face transactions
(easier if made online/email)
What is common mistake?
where both parties to the C are suffering from the same misapprehension, and that misapprehension is sufficiently fundamental to the nature of the contract. – mistake is sufficiently fundamental to affect the validity of the contract.
Common mistake does not operate where:
● The mistake is not sufficiently fundamental
● One party is at fault
● The contract makes provision for the issue
What is mutual mistake
it is where both parties are mistaken but about different things
ie. they negotiated at cross purposes.
Test for mutual mistake
what a reasonable third party would believe the agreement to be, based on the words and conduct of the parties themselves
what is unilateral mistake
where only one party is mistaken and the other party knows or is deemed to know of the mistake.
The acceptance therefore doesn’t correspond with the offer.
M as to the nature of the document signed: person mistakenly signs document, not knowing it is a contract, may raise defence of non est factum: IF
Mistake due to either:
(i) blindness, illiteracy, or senility of signatory; or
(ii) a trick or fraudulent misrep as to nature of the doc, provided the person took reasonable precautions
Unilateral mistake as to face-to-face transactions
presumed seller intended to deal with person in front of them- by sight and hearing and that is what happened
Rebuttable, and contract is voidable, if seller establishes that identity (rather than attributes) was of vital importance to enter into contract.
Unilateral mistake as to identity in distance selling transactions
● Must still be a mistake as to identity rather than attributes, seller must believe that they intended to deal with an identifiable third party.
● contract is void
● title remains with the original seller
How to prove inducement
EITHER
- representee shows that the statement would have influenced a reasonable person; and
- representor cannot show that the statement did not influence this particular representee
OR
Representee shows that it personally was induced by the statement (subjective test)
