Mistake Flashcards
what are the different types of mistake in contract law
common mistake
mutual mistake
unilateral mistake
define common mistake
Both parties made a mistake which goes to the root of the contract and the result is a contract that they did not want.
define communication mistake
Where parties deemed to never have come to an agreement in the first place.
Unilateral communication mistake – mistake by one party
Mutual communication mistake – mistake by both party
what are the different ways a mistake can be made
common mistake
communication mistake
Define void and voidable
Void - contract never having come into existence or may be brought to an end, as a result of a mistake by either or both of the parties.
Voidble - the contract does exist and remains valid until the innocent party takes some action to set the contract aside
What effect does the remedies void and voidable have on third parties
Void - no title passes; goods are returned to the seller
Voidable - those who acquire goods under the contract will obtain good title to those goods
What are the different types of common mistake
Mistake as to the existence of the subject matter
Mistake as to an essential quality of the subject matter
Factors that must be present for common mistake
- There is a common assumption that the situation exists
- Situation must be real to make performance possible
- Both parties agree situation doesn’t exist
- Non-existence is not the fault of either party
- Non-existence renders performance impossible
What is Mistake as to the existence of the subject matter
When the subject matter of the contract does not actually exist.
Parties agree the contract no longer exists – contract becomes void.
e.g., Courturier v Hastie [1856] – subject matter didn’t exist when contract was made- so contract void.
What is Mistake as to an essential quality of the subject matter
This type of common mistake will only void when contract is different to what it was believed to be.
^ Great Peace Shipping Ltd v Tsavliris confirmed ruling in Bell v Lever Bros – seen in this case as case wasn’t voided bc the subject matter wasn’t affected.
This doctrine is applied narrowly – seen in Leaf v International Galleries.
what case relates to Mistake as to the existence of the subject matter
Courturier v Hastie [1856] – subject matter didn’t exist when contract was made- so contract void.
what case relates to Mistake as to an essential quality of the subject matter
Great Peace Shipping Ltd v Tsavliris confirmed ruling in Bell v Lever Bros – seen in this case as case wasn’t voided bc the subject matter wasn’t affected.
Leaf v International Galleries - This doctrine is applied narrowly
cases relating to common mistake
Leaf v International Galleries.
Bell v Lever Bros
Great Peace Shipping Ltd v Tsavliris
Courturier v Hastie [1856]
define mutual mistake
parties are deemed to have never come to an agreement in the first place as there was no consensus ad idem.
Seen in Raffles v Wichelhaus (1864)
What is the case which relates to defining mutal mistake
Raffles v Wichelhaus (1864) – no consensus ad idem
What is the test to see if a contract is void due to mutual mistake
Objective test – “would a reasonable person looking at the correspondence between the parties have understood the contracts meaning?”
IF yes – contract still valid.
If NO – contract will void
define unilateral mistake
one party makes a mistake and the other party is aware of the mistake.
Contract may void if mistake is sufficiently important to contract.
What are the two categories of unilateral mistake
Mistake as to the terms
Mistake as to the identity
What is mistake as to the terms
relates to the price.
e.g., Hartog v Colin and Shield.- held contract as void when there is obvious price error.
What case links to mistake as to the terms
Hartog v Colin and Shield - held contract as void when there is obvious price error.
What is mistake as to the identity
One party makes a mistake as to the party they are contracting with.
Identity must be essential to the contract- not just attributes.
Types of mistake to identity
Face to face negotiations
Negotiations at a distance
What is face to face negotiations
A person is deemed to have contract with the person in front of them unless they can
substantially prove they intended to deal with someone else.
Hard to prove.
e.g., - Lewis v. Avery – even though rogue lied about identity, the identity was not central to the sale so there was no void.
THIS CONTRASTS WITH
Ingram v Little – C went to great lengths to check identity. This makes it central to the case so case voided.
What cases relate to face to face negotiations
Lewis v. Avery – even though rogue lied about identity, the identity was not central to the sale so there was no void.
THIS CONTRASTS WITH
Ingram v Little – C went to great lengths to check identity. This makes it central to the case so case voided.
What is negotiations at a distance
When a party negotiates at a distance – it assumed they intend to deal with person named.
If other party lies – the contract can void.
Cundy v Lindsay – Lindsay meant to deal with a real company – but was tricked. Therefore, there was no contract between them and fraudster. The contract then voids
What case goes with negotiations at a distance
Cundy v Lindsay – Lindsay menat to deal with a real company – but was tricked. Therefore, there was no contract between them and fruaster. The contract then voids
Is unilateral mistake more likely to be void over face to face or distance negotiations
Face-to-face. Hard to prove you didn’t mean to deal with the person in front of you
What happens when the unilateral negotiations involves a third party
seen in Shogun Finance v Hudson (2004)
^ a contract was completed at distance- but the company was dealing with a fraud. because of this- contract void.
however, fraud had already sold the car to 3rd party.
3rd party loses car even tho they did nothing wrong.
this has been labeled as unfair
Cases relating to mistake
Courturier v Hastie [1856] (mistake to subject matter)
Great Peace Shipping Ltd v Tsavliris (mistake to essential quality)
Bell v Lever Bros (mistake to essential quality)
Leaf v International galaries (mistake to essential quality)
Raffles v Wichelhaus (1864) (mutual mistake)
Hartog v Colin and Shield (mistake to the terms)
Lewis v. Avery / VS / Ingram v Little (face to face negotiations)
Cundy v Lindsay (distance negotiations)
Shogun Finance v Hudson (2004) (third parties)
