Mistake

Question 1

Introduction to the Doctrine of Mistake

Answer 1

Not everyday mistakes

Lord Denning in Leaf v Int. Galleries (1950):

This was a contract for the sale of goods. There was a mistake about the quality of the subject matter, because both parties believed the picture to be a constable; and that mistake was in one sense essential or fundamental. But such a mistake does not avoid the contract: There was no mistake at all about the subject matter of the sale. It was a specific picture, “Salisbury Cathedral”. The parties were agreed in the same terms on the same subject-matter, and that is sufficient to make a contract.

Question 2

Types of mistake

Answer 2

- Common Mistake

- Mutual Mistake

- Unilateral Mistake

- Documents mistakenly signed

Doctrine of mistake is construed narrowly

Question 3

Common Mistake

Answer 3

• Shared Mistake
• Parties make same mistake
• Three types of common mistake:
  
  • Res extincta (“the thing does not exist”)
    
    • Courturier v Hastie
    • Timing of crucial importance
  • Res suar (“the thing is his”)
    
    • Cooper v Phibbs (1867)
    • Cannot contract for something which you already own
  • Third type of common mistake
    
    • Mistake as to “Quality (identity) of the subject matter

Question 4

Common Mistake

Case authorities

Answer 4

• Bell v Level Bros

Lever bros appointed Mr Bell and Mr Snelling (the two defendants) as Chairman and Vice Chairman to run a subsidiary company called Niger. Under the contract of employment the appointments were to run 5 years. However, due to poor performance of the Niger company, Lever bros decided to merge Niger with another subsidiary and make the defendants redundant. Lever bros drew up a contract providing for substantial payments to each if they agreed to terminate their employment. The defendants accepted the offer and received the payments. However, it later transpired that the two defendants had committed serious breaches of duty which would have entitled Lever bros to end their employment without notice and without compensation. Lever bros brought an action based on mistake in that they entered the agreement thinking they were under a legal obligation to pay compensation.

The House of Lords held that this was only a mistake as to quality and did not render the contract essentially different from that which it was believed to be. The action therefore failed.

• Solle v Butcher
• Grist v Bailey
• Magee v Pennine Insurance Co
• Great Peace Shipping v Tsavliris Salvage

Question 5

Common Mistake

Answer 5

Strickland v Turner

Scott v Coulson

McRae v Commonwealth Disposals

Frederick E. Rose v William Hi. Pimm

Harrison & Jones v Bunten & Lancaster

Associated Japanese Bank v Credit du Nord

Question 6

Mutual Mistake

Answer 6

• No “meeting of the mind” (ad idem)
• Objective test
• Wood v Scarth
• Raffles v Wichelhaus
• Smith v Hughes
• Tamplin v James
• Scriven Bros v Hindley

Question 7

Unilateral Mistake

Answer 7

• Only one party makes a mistake
• Other party know of the mistake
  
  • Hartog v Colin and Shields
  • Chwee Kin Keong v Digilandmall Com
• Distinguish between mechanical and business errors

Question 8

Mistake as to identity

Answer 8

• Three requirements to be fulfilled
• Person invoking unilateral mistake must have thought they were dealing with another party
  
  • Kings Norton Metal Co Ltd v Etridge, Merret and Co
• The other party knew of the mistake
  
  • Boulton v Jones
• Identity was of crucial importance
  
  • Philips v Brook, Lewis v Averay
  • Compare: Cundy v Lindsay, Ingram v Little

Question 9

Unilateral Mistake

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Case authorities

Answer 9

- Webster v Cecil

- Hardman v Booth

- Lake v Simmons

- Shogun Finance Ltd. v Hudson

Question 10

Unilateral Mistake

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Three requirements to be fulfilled for a unilateral mista to identity

Answer 10

Three requirements to be fulfilled for a unilateral mistake to identity

• Person invoking unilateral mistake must have thought they were dealing with another party
  
  • Kings Norton Metal Co v Edridge, Merret & Co
• The other party knew of the mistake
  
  • Boulton v Jones
• Identity was of crucial importance
  
  • Philips v Brooks
  • Lewis v Averay
    (Compare with Cundy v Lindsay, Ingram v Little)

Question 11

Documents mistakenly signed

• Signing something believing it to be something different from what it is
• Could be regarded as unilateral mistake but courts have treated it as seperate category
• Non est factum “It is not my deed”

Question 12

Documents mistakenly signed

Case authorities

Answer 12

**Saunders v Anglia Building Society

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**Foster v Mackinnon

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Howatson v Webb