Mistake Flashcards
What does mistake do to a contract?
It makes a contract void, not voidable.
What are three main types of mistake?
Unilateral mistake - only one party is mistaken.
Mutual mistake - parties are at a cross-purpose.
Bilateral mistake - both parties have made the same mistake.
If a mistake happens after a contract is entered into, it is likely to be what as opposed to the mistake happening before a contract is entered into?
Frustration, rather than mistake.
Used to be a distinction between mistakes of fact and mistakes of law, what overturned this distinction?
Brennan v Bolt Burden.
Bell v Lever Bros - Facts
Both under the mistaken impression that Mr Bell was entitled to his redundancy payment, he wasn’t as he was committing fraud.
Bell v Lever Bros - Ratio
Mistake was not fundamental enough to make the redundancy agreement void. Establishes very fundamentally that a high bar must be passed before something can be said to be a mistake.
Bell v Lever Bros - Ratio
Mistake was not fundamental enough to make the redundancy agreement void. Establishes very fundamentally that a high bar must be passed before something can be said to be a mistake.
For a mistake to be found, mistake must be of such quality that parties would not have entered into contract had they known of the true facts.
Was not an essential and integral element of the subject matter of the contract - both got what they wanted, Lever Bros made huge profits from having Bell.
Mistakes of existence, identity, and possibility are relatively ____ as opposed to mistakes of quality.
straightforward.
What was the mistake in Galloway v Galloway?
Mistake of the EXISTENCE of the marriage. Deed of separation had been entered into on a fundamentally mistaken basis.
What section in the SOGA concerns mistake as to existence of subject matter in a contract for the sale of goods?
S 6 SOGA, if goods have perished or lost at time contract is made WITHOUT KNOWLEDGE of selling party, contract is void.
Couturier v Hastie - Ratio
At the time of original contract between Couturier v Hastie, the corn was fine, so there could be no recovery for mistake.
Couturier v Hastie - Explanation?
Mistake as to the existence of subject-matter at time contract is made always makes contract void.
Implied condition in any sale of goods that goods will be in existence at time contract is made.
Couturier v Hastie - Explanation?
Mistake as to the existence of subject-matter at time contract is made always makes contract void.
Implied condition in any sale of goods that goods will be in existence at time contract is made (Solle v Butcher).
(Solle v Butcher) - Ratio
Mistake as to whether property was rent control. At time mistakes of law were not considered actionable mistakes.
Possible implied condition that it was a possibility to charge 250 pounds for the property?
Lord Denning created the new mistake of mistake at equity - heavily controversial.
Whether a contract is void or not for mistake depends on
interpretation of contract (McRae v Commonwealth Disposals Commission).
McRae v Commonwealth Disposals Commission - Facts
Wanted someone to recover a tanker, offered for anybody recovering the tanker to recover its contents and sell it for scrap metal.
Turns out there was no tanker - EXISTENCE OF TANKER WAS IN DOUBT.
Commonwealth Disposals Commission argued they shouldn’t have to pay for breach as the contract was void from the beginning due to the mistake.
McRae v Commonwealth Disposals Commission - Ratio
No need to look at mistake - matter of contractual interpretation. There was a condition in the contract about the existence of the tanker, which was breached by non-existence.
McRae v Commonwealth Disposals Commission - Ratio
No need to look at mistake - matter of contractual interpretation. There was a condition (promise) in the contract about the existence of the tanker, which was breached by non-existence.
What did the court in Great Peace Shipping Ltd say about the doctrine of mistake at equity?
They cast great doubt on the validity of it, but didn’t completely overturn it as they couldn’t do so as the original one was a HoL judgment.
What did the court in Great Peace Shipping Ltd say about the doctrine of mistake at equity?
They cast great doubt on the validity of it, but didn’t outright overturn it. Re-iterated common mistake must be fundamental enough.
What is mistake as to title?
Where a buyer tries to buy something from a seller, which unbeknownst to them both, is already owned by the buyer in question.
Cooper v Phibbs - Facts
Uncle and Nephew - Uncle thought he owned a fishery, told the nephew he can buy it from him.
Nephew already owned it.
Cooper v Phibbs - Ratio
Contract was voidable - unusually, a modern court would not say this.
Cooper v Phibbs - Ratio
There was an operative mistake.
Diamond v British Columbia Thoroughbred Breeders’ Society - Facts
Two horses confused by auctioneers and bidders - thought he was buying one horse but bought another.
Diamond v British Columbia Thoroughbred Breeders’ Society - Ratio
NOT a MISTAKE AS TO IDENTITY. One horse is as good as another - it’s still a horse.
Mistake as to identity, however, could be a separate category of bilateral mistake.
Sheikh Bros v Ochsner - Facts
Sizeall - contract for licence to produce sizeall. Land was not capable of producing enough sizeall. Both parties believed it was so.
Sheikh Bros v Ochsner - Ratio
PHYSICAL impossibility - void for mistake.
Three types of mistake as to possibility of performing contract.
1: Physical impossibility.
2: Legal impossibility.
3: Commercial impossibility.
Cooper v Phibbs - Ratio
Legally impossible to buy something you already own.
Griffith v Brymer - Facts and Ratio
When Queen Vic was very old, her son was also very old. When she died, supposed to be a big coronation for Edward 7th. He wasn’t very well at the time, however.
Hire of room to overlook the mall so someone could watch.
Contract was entered into at 11am on the 20th June, decision that procession would not go ahead had been taken at 10am on 20th June. Before contract had been entered into. They both did not know of this decision.
THUS void for mistake, commercially impossible for room to be rented at vastly increased prices and so fundamental to contract as to make it void for mistake.
What is the general rule with mistakes as to quality of contract?
Must be fundamental enough to avoid contract but even then, courts are VERY reluctant to find a something is fundamental enough to give rise to a mistake.
Leaf v International Galleries - Facts
Painting was not by Constable.
Mistake could have been an alternative argument - even though main one was misrep.
Not fundamental enough to be a fundamental mistake as to quality.
Harrison and Jones v Burton and Lancaster - Facts and Ratio
Kpock was identified as being a specific brand. It was not that brand however.
Was this mistake operative enough to make it void for common mistake.
No, was not fundamental enough.
Great Peace Facts
Two ships, one called the Great Peace and Great Providence.
Great Peace offered salvage services.
Belief was that the distance was 35,000 miles away, was more though.
Mistake was one to quality anyway, was still possible to perform the contract - not an operative mistake. MUST BE FUNDAMENTAL.
Why is it so difficult for mistakes as to quality to overcome the fundamental to the contract requirement?
They generally don’t make the contract impossible to perform.
A contract for a sale of horse, where there is a mistake as to the horse in question, doesn’t make the contract fundamentally different and impossible to perform.
Scott v Coulson - Facts
Bought life insurance policy for someone called Mr Death who was actually Dead.
Scott v Coulson - Ratio
There was a mistake of quality - quality being the quality of life or death, but it had to be fundamental enough here to void the contract - can’t have a life insurance policy for someone who is dead.
Test for a valid bilateral mistake as to quality.
1: Common assumption about state of affairs - both parties believed ships were at the same distance.
2: There must be no warranty or promise that the state of affairs exists (as there was in Mcrae)
3: Non-existence of state of affairs must not be either party’s fault (nobody’s fault that the distance was different then what it was thought)
4: Non-existence of state of affairs must make contract performance impossible - The Great Peace failed on this instance, they could still retrieve the Great Providence.
5: State of affairs or existence must be a vital feature of consideration or of circumstances which must exist if performance of the contract is to be possible (Was met here, there would obviously have to be a higher charge for rescuing at a different distance than originally thought).
Associated Japanese Bank v Credit Du Nord - Facts
Rogue called Jack Bennett. Said the machines were in existence. Japanese Bank bought them and leased them back to him. Credit Du Nord would pay rental on machines.
Machines never existed.
Two Banks sued each other.
Was the fact that there were no machines, fundamental enough to be a mistake as to quality?
Associated Japanese Bank v Credit Du Nord - Ratio
Here the mistake was fundamental enough to be a mistake as to quality at common law.
Condition precedent rules - McRae v Commonwealth
If both parties have equal knowledge on their own grounds as to the existence of the subject matter which turns out to be false - then there is an implied condition, failure of which sets aside the contract.
If one mistaken party imparts mistaken knowledge to another, then there is an implied promise, and there will be a breach of contract.
Apvodedo NV v Collins - Ratio
Ultimately, the issue of a mistake of ownership (there was a fraudster who claimed to won the Ritz Hotel and ran off with money) was not settled, but obiter, the judge said it could likely be fundamental enough to be a mistake as to quality of subject matter.
Graves v Graves - Facts and Ratio
Both parties thought housing benefit would cover rent, it did not.
Mistake as to quality was fundamental enough here.
A fundamental mistake must go to the
root of the contract (Kyle Bay Ltd v Underwriters - consequences don’t matter, seriousness of the mistake matters)
Raffles v Wichelhaus - Facts
One thought was coming on the December Peerless, other thought September Peerless. Mistaken with different ideas as to same subject matter, no meeting of the minds.
What is unilateral mistake?
Where one party makes a mistake and the other party knows about it.
Where one party is mistaken as to the identity of other party.
Scriven Bros v Hindley - Facts
Sale at auction of two lots, bid for two lots. Both thought that they contained hemp. One lot contained hemp but the other contained tow.
Hindley said they wouldn’t pay.
Scriven Bros v Hindley - Ratio
No meeting of the minds - one thought they were buying hemp, the other thought they were selling tow.
Hartog v Colin and Shields - Facts
Made a mistake with the price they were offering - claimant accepted offer. Defendants refused to sell.
Hartog v Colin and Shields - Ratio
There was no contract and was void for mistake, because the claimants must have realized that there was a mistake.
Smith v Hughes - Facts
Bought oats - old oats in sample. When bought oats, they were new.
Was there a mistake?
Smith v Hughes - Ratio
No, buyer beware (caveat emptor).
Give an example of when there will be a unilateral mistake as to identity.
Purchase of goods by a rogue with false identity, who doesn’t pay, takes goods and sells them on.
Conflict between the original owner and bona fide purchaser who received goods.
What will happen with a mistake as to identity with a third party involved?
Rogue/individual never took title of the goods.
However, if there is a fraudulent misrep, as there likely will be in this case, is that there would be intervening third party rights and the contract won’t be able to be rescinded.
With no third party rights, the contract will be voidable.
When will a court be more likely to hold that there will be an actionable unilateral mistake as to identity?
When the contract is made in writing rather than face to face, as there will NOT be the presumption that one intends to contract with whoever is in front of him/her.
Two requirements for mistake as to identity.
1: Identity must be material: Dennant v Skinner - auction so good title passed to Skinner, identity not really important.
2: Mistake must be fundamental: Cundy v Lindsay
Cundy v Lindsay - Ratio
Impersonating Renkawon - was void for unilateral mistake, because they would not have shipped to someone else.
King’s Norton Metal v Edridge and Cundy v Lindsay - distinction.
In King’s Norton they hadn’t heard of Cullen and Co, but in Cundy and Lindsay they had heard of Renkawon(and it was important to them) so it was fundamental there.
Ingram v Little (oral contracts) - Facts and Ratio
Two old ladies who sold car to rogue called Mr Hutchinson.
Yes, that man’s name and address was in the post office so he could take the car. It was a bad cheque however. Car was sold onto Mr Little.
Court was sympathetic and held contract to be void, now would be doubted.
How can we rebut the presumption that one cannot claim mistake for unilateral mistake as to identity when contracting with someone in front of you - Test relevant for oral and written contracts - Shogun Finance v Hudson?
1: They intended to deal with someone else.
2: The party they dealt with knew of this intention.
3: Identity was regarded as being of crucial importance.
4: They took reasonable steps to check the identity of the other person.
Shogun Finance v Hudson - Facts
Identity Fraud - Bank credit checked Mr Patel, but it wasn’t Mr Patel.
What does Phillips v Brooks give us?
The classic principle that when dealing face to face, you intend to contract with the person in front of you, regardless of who they say they are.
William Sindall plc v Cambridgeshire County - Principle
If you have dealt with or included the allocation of risk for a mistake or frustration in contract, then you cannot claim it.
Differences between mistake at common law and mistake at equity.
In equity, wider, contract voidable not void, and court can impose conditions. Innocent third parties will be protected if they have acquired rights.
Smithson v Hamilton - Ratio
Mistake at equity is gone.
