Mistake Flashcards
Common mistake, res extincta cases:
Courtier v Hastie (1856)
Facts: the contract was for the sale of a cargo of Indian corn in transit. Both parties believed the corn existed at the time of the contract. During the voyage, the cargo overheated and fermented such that it was unfit to carry further so was sold off. Defendant claimed for the cost of the corn.
Held: court declared the contract void. Common sense dictated that if the subject matter didn’t exist at formation, contract didn’t exist either.
McRae v Commonwealth Disposals Commission [1951]
Facts: commission has invited tenders for a salvage operation in relation to an oil tanker said to by lying at the bottom of the reef and the plaintiffs were awarded the contract but found that the tanker didn’t exist. Commission held the contract void for mistake.
Common mistake, res sua:
Cooper v Phibbs (1867)
Facts: an uncle mistakenly told his nephew that the uncle was entitled to a fishery. After he uncle had died the nephew acting in reliance of his uncle’s statement entered into an agreement to rent the fishery from the uncle’s daughters. Geiger the fishery actually belonged to the nephew himself.
Held: void at common law.
Common mistake, mistake as to the quality:
Not sufficiently fundamental to be an operative mistake at common law. Leaf v International Galleries, gallery and purchaser believed that it was by Constable. Five years later gallery tried to resell the painting and found that it wasn’t and so worth considerably less. Court held that in the absence of actionable misrepresentation the contract was valid.
Bell v Lever Bros [1932]
Facts: entered into an agreement with one of its employees (Bell) to leave the company in exchange for £30,000 compensation. Later revealed that there was in fact grounds for termination without compensation because he had previously breached his contract.
Held: HoL held the contract was valid since the mistake was not ‘of such a fundamental character as to constitute an underlying assumption without which the parties would not have made the contract they in fact made.’
Common mistake, mistake as to quality, mistake is sufficiently fundamental:
Great Peace Shipping v Tsavliris (‘The Great Peace’) (2002)
Facts: contract concerned a chartered ship, The Great Peace, to provide urgent assistance to a salvage operation. At be time, both parties thought the shop was about 35 miles away but in fact was 410 and sought to avoid the contract on the basis of common mistake.
Held: the CoA held that the mistake was no sufficiently serious to render the contract void at common law - it would still have been possible for the ship to give assistance, even though later than anticipated.
Mutual mistake, terms of the contract:
Raffles v Wichelhaus (1864)
Facts: the claimants entered into a contract to sell some bales of cotton to the defendant. Contract specified the cotton would be arriving on the ship Peerless from Bombay. There were two ships coming from Bombay named Peerless, one in October and one in December. Defendant claimed was for October ship. Claimant tried to deliver December load and was refused, claimed.
Held: the court considered whether a reasonable third party would interpret the contact in line with the understanding of one or the other of the parties. If the court can find a common intention the contract will be upheld, but this was not possible, so the contract was void.
Mutual mistake, subject matter of the contract:
Scriven Brothers & Co v Hindley & Co [1913]
Facts: defendants bid at an auction for two lots, believing both to be hemp. One was actually tow, but both were marked ‘SL’. Purchasers had been shown bales of hemp as samples marked ‘SL goods’. Unusual for them to be shipped under the same mark.
Held: court considered that a reasonable third party could not determine whether the contract was for hemp or tow. Contract was void.
Mutual mistake, contract not void where only one party is mistaken and performance of contract is possible:
Smith v Hughes (1872)
Facts: plaintiff ha differed to sell oats to the defendant who trained horses. The defendant was shown a sample of oats and agreed to buy all. When delivered they turned out to be ‘new’ oats which were of new use he sought to escape the contract on the basis he thought he was buying ‘old’ oats. Conflict of evidence as to whether the plaintiff had ever referred to them as ‘old’.
Held: it was not enough that the defendant had made a mistake. To allow him to escape it would be necessary to show that the defendant thought that it was a term of the contract.
Unilateral mistake, mistaken identity:
Cundy v Lindsay (1878)
Facts: a fraudulent named Blenkarn placed large orders for handkerchiefs with the plaintiffs. He was trading from Wood Street, and so the plaintiffs though they were dealing with the reputable firm Blenkiron & Co, which traded on the same street. Blenkarn deliberately contributed to this mistake by the manner in which he signed his order. Goods supplied in credit and sold on by Blenkarn to the defendant, who was an innocent third party.
Held: HoL confirmed there was no contract. As Lord Cairns put it: “of him they knew nothing, and of them they never thought. With him they never intended to deal.”
Lewis v Averay [1971]
Facts: plaintiff was a student who advertised his car for sale. Fraudulent party pretended to be Richard Greene, an actor famous at the time for playing Robin Hood. In support of his claim the fraudulent party produced a ‘pass’ from Pinewood Film Studios that carried his photograph and an official stamp. Impressed, the plaintiff agreed to take a cheque which proved to be worthless. By the time the cheque was dishonoured the car had been sold to the defendant who was innocent.
Held: while probably voidable for misrepresentation, not void for mistake.
Unilateral mistake, terms of the contract:
Mistaken statement of intent by one party and the other party knows it, mistake is operative and the contract is void.
Hartog v Colin & Shields [1913]
Facts: defendants were London hide merchants. They had discussed selling the claimant ‘30,000 hare skins at 10d per skin’. When the final offer was put in writing they put ‘30,000 hare skins at 10d per lb’. This meant it was one third of the price previously discussed. Claimant brought an action to hold the defendants to the offer.
Held: court held that the claimant must have realised the defendants’ error.
