Mistake (2) Flashcards
Lecture 4
What is mutual mistake and its significance?
- BOTH parties have misunderstood each other’s intention
- Con sensus ad idem (meeting of the minds) {Raffles v Wichelhaus (1864)
- Also known as “offer and acceptance” mistake
- Where parties have cross purposes, the courts apply “objective test”
What is the objective test in more detail? (mutual mistake)
- Reasonable person understanding contract with single meaning
- Yes = contract valid on that meaning
- No = contract void for mistake
What can we learn from the case of Raffles v Wichelhaus (1864)?
- Issue: two ships have same name and ships sailing at different names (October and December) = cross-purposes of the mind
- Held: the contract was void as there was no consensus ad idem
What are the main differences between common mistake and mutual mistake?
- Common: both parties make the same fundamental mistake
- Mutual: both parties misunderstood each other’s intention, these mistakes are different (absence of genuine agreement)
What is unilateral mistake and its significance?
- Whereby ONE party at the time of making the contract was very seriously mistaken, and mistake was known to the other party
- Categories: mistakes relating to terms + mistakes to other party’s identity
What are mistakes relating to terms/promise and what is its significance?
- One party mistaken as to the terms/promise
- Other party knows of that mistake, or the circumstances are such that he may be taken to be aware of it
What can we learn from the case of Hartog v Colin & Shields (1939)?
- Issue: Mistake of hare skins made by piece or weight
- Held: H could not reasonably have supposed that offer contained C & S’s real intention. Singleton J. held that H did in fact know that C & S were under a mistake
What can we learn from the case of Smith v Hughes (1871)?
- Issue: Mistake of the quality of oats, H discovered old oats and argued quality of oats makes contract invalid
- Held: both arguments failed. Take the objective approach (you cannot have silence as misrepresentation + mistake was not as to the terms of contract, but only as to the quality)
What are mistakes as to other party’s identity and what is its significance?
- A contracts with B, believing B to be C (identity unusually immaterial)
- Matters if purchase of good by theif who assumes false identity does not pays food sells to 3rd party and disappears
- Conflict between original (unpaid) owner and 3rd party owner from thief
Based on English law, what are the main principles regarding mistake as to other party’s identity?
- You cannot give what do you not have
- If the contract transfers ownership in goods to the rogue, then this can be further conferred to the 3rd parties (and vice versa)
- Contract between seller and rogue determines whether claim against 3rd party will prevail
Why is there a distinction between written contracts and contracts made face-to-face?
- To determine whether or not the mistake in identity renders the contract void
- Face-to-face: strong presumption each party intends to contract with party in front of them (contract not void)
- Writing: names of parties more important (contracts can be void)
What can we learn from the case of Cundy v Lindsay [1878]?
- Issue: Is contract void of mistake in identity with a signature fraud?
- Held: Yes, L did wanted to contract with company not fraudster
What can we learn from the case of the King’s Norton etc. (1897)?
- Issue: K never heard of Hallam&Co
- Held: contract not void but voidable for misrepresentation, K intended to contract to whoever sent letter and mistake only related to one attribute, not identity
Therefore, what is the distinction between these two cases?
- Cundy: claimants intended to deal with the identified third party B & Co (of whom they knew)
- King’s Norton: claimants never heard of H & C & simple intended to deal with whoever had written the letters
- To establish successful claim, there must be another such person/company + mistake must be as to identity, not attributes
For such a mistake to be an operative mistake and make agreement void, what should the mistaken party show in contracts made face-to-face?
1) Intended to deal with someone else
2) Party they dealt with knew of this intention
3) Regarded identity as of crucial importance
4) Took reasonable steps to check identity of the other person
What can we learn from the case of Philips and v Brooks (1919)?
- Fraudster wrote check claims he is a person with good credit and p checked address of fraudster
- Held: contract not void, when parties contracted face-to-face, they want to deal with person in front
What can we learn from the case of Shogun Finance v Hudson [2003]?
- Fraudster dealt with car dealer personally and sold car to 3rd party
- Defendant had another plan dealing with a middleman (was not personally in garage)
- Held: acting with middleman does not abuse presumption of face-to-face acting on their behalf/benefit
What is the rebuttal of presumption (Inter Praesentes)?
- Presumption that parties intended to deal with whoever was before them is strong {Shogun Finance}
- Lord Walker: presumption rebutted only when rogue impersonates an individual with whom the claimant is acquainted
