mistake Flashcards
McDermott (2 competing interests)
i) it would produce uncertainty if parties could easily walk away from a contract
ii) existence of fundamental mistake may mean parties never reach a consenus ad idem despite the existence of what appears to be an agreement
McDermott (considerations)
i) was there a mistake at the time the contract was entered into
ii) what is the nature of the mistake - one of fact or law
iii) is P seeking to invoke common law or equitable principles
iv) what is the nature of the remedy being sought
O’Loughlan v O’Callaghan
parties of a lease mistakenly thought rates were to be paid at a higher level, tenant was paying more than was required, no relief open to tenant on the basis that the mutual mistake was one of law
Cooper v Phibbs
P leased fishery to D, both assumed P owned fisher when he did not under a private act of parliament, contract was set aside on mutual mistake in equity
O’Neill v Ryan
later cases show that circumstances where CM will nullify a contract are extremely limited
Res Extincta principle
a contract will be void at common law where the common mistake relates to the very existence of the subject matter
Matter of Patrick Brennan
nearest relative of B’s estate and D (his children) made agreement re his assets, more assets were then discovered, P claimed the original agreement was based on CM, Budd J held there was a mistake between the parties but this regarded quantity, as there was no mistake as to its essential nature the doctrine didn’t apply
Couturier v Hastie
parties contracted for sale of cargo of corn which unbeknownst to the parties had already perished en route, held contract was void as where something did not exist no contract could be formed
Galloway v Galloway
married couple made a separation agreement, turned out the man’s first wife was still alive, therefore the second marriage was void along with the separation agreement on the common mistaken belief that the couple were married
Res Sua
common mistake described as forming the fundamental underlying assumption of the contract, a mistake which radically alters performance of the contract - contract void
Bell v Lever Bros
LB wanted to remove director and agreed to do so by paying compensation, turned out D had breached his duties and sought to void contract on CM, HOL held the mistake was not sufficiently fundamental as it did not alter the circs of the contract
Lord Atkin
the mistake must be to the existence of some quality which makes the thing w/o the quality essentially different from the thing as it was believed to be
Solle v Butcher
involved agreement to lease flat, CM that flat was not rent restricted, rent agreed was significantly more than max permissible, tenant sought to recover overpayment claiming contract was void, unsuccessful
Leaf v International Galleries
CM that picture was by Constable, it was not, mistake went to the heart of the contract but did not make it void as essential characteristics remained
Western Potato Co-op v Durnan
parties contracted for the sale of seed potatoes on the common assumption that they were sound, contract was void when the assumption was proved wrong
Solle v Butcher (equity intervention)
held lease was not void however CM of the parties made contract voidable and court had discretion as to whether to set it aside only on the terms that the tenant should pay the full rent which could properly be claimed consistent with rent control legislation
Great Peace Shipping
ship was damaged, D asked another to help until salvage could occur, the mistake was that it was said that the ship was 35 miles away when it was 410, when discovered other ships were nearby D attempted to rescind contract, CA found mistake was not sufficiently fundamental, they got as they contracted for, a charter ship, a key sign that the mistake wasn’t fundamental was that on discovering the location of GP D did not seek to cancel arrangement immediately, held there is no jurisdiction to grant rescission of a contract on the ground of common mistake where the contract is valid and enforceable on the ordinary principles of contract law
Trietal
GP adds certainty to the law at the expense of justice
Instrum Justitia
Irish courts confirmed that the approach in Solle is the most desirable where the justice of the case requires it
Biehler
argues against following GP as equitable intervention allows for the setting aside of a contract where the justice of the case requires it
Delaney
posited strong reasons to abandon GP line of authority in Ireland, equity exists precisely for the purposes of fairness and justice, it should be allowed to come to the rescue of parties who are suffering great losses owing to innocent mistakes
Smith v Hughes
racehorse trainer agreed to buy a parcel of oats thinking he was buying old oats, oats were actually new, contract was not void as it did not relate to the terms of the contract but the motive
Clayton v Love
P accepted offer for scampi and took it that it would be shipped frozen, SC held a reasonable observer would believe that it would be shipped frozen and D were therefore bound by this term
Raffles v Wichelhaus
A agreed to buy and B to sell cargo of cotton from a named ship, two ships with the same name set sail, parties at a cross-purposes over which ship the contract related to, court held a reasonable man would conclude that no contract had been entered into as the parties could have been regarded as entering into either of the two possible contracts
