Mistake Deck Flashcards
What are the three grounds of mistake and what types of facts trigger them?
(1) Mistakes as to identity; (2) Common mistake as to a fact; (3) Unilateral mistake as to a fact.
(1) applies where A is mistaken as to B’s identity; (2) applies when both parties have made a mistake as to a fact existing at the time of the contract; (3) applies when B is mistaken as to a fact or terms by himself.
Authority for the proposition that if A is mistaken as to a factual quality of the goods then B can take advantage of this
Smith v Hughes: A was mistaken as to the quality of oats (thought they were old oats) and B was aware of this. However, as neither side thought they were terms B was entitled to let A continue acting mistakenly.
Authority: If A is mistaken as to a term, or it is objectively clear to A that the fact was one of B’s terms, then B is bound if B knows or ought to have known about this mistake. (???)
Smith v Hughes;
Hartog v Collin and Shields: so subjective intention can come in and prevent B from ‘snapping up’ an offer when he knows that A was mistaken, even if not objectively clear, about a term.
Centrovincial Estate / OT Africa: likewise, when B ought to have known that A was mistaken he will be bound. This might require some reason to suspect A’s mistake first though, or a failure to make reasonable enquiries.
Cf Rectification which seemingly requires actual knowledge for unilateral act rectification (Wimpey). This is for written contracts.
Where A is mistaken and B led A into this mistake, knowlingly or unknowingly, then there is no contract, even if not objectively apparent that A was accepting different terms.
Scriven Bros: markings on the floor suggested that the product A was buying was different. Even if A objectively appeared to be aiming to buy tow, the conduct of B meant it did not matter and A was taken to be objectively trying to buy hemp.
Non Est Factum
Gallie v Lee: Misunderstanding of the fundamental nature of the contract. Losing reading glasses is not enough. This is a very high standard and usually requires either defective education, illness, or mental incapacity.
Fundamental nature is pretty strict and merely knowing the contract involves the advancement of money is enough.
Hambros bank: an omission to read the terms will almost certainly exclude the doctrine.
The effect of a unilateral mistake
When unilateral mistake succeeds it is unclear what happens. When it is on the objective basis it seems fair to void the ocntract. This is on the basis when the reasonable man knows the other is mistaken as to the term, OT Africa, then they do not intend to contract. See danger of easy unilateral mistake rectification.
Or, alternatively, the contract could be enforceable against the other party who was aware of the mistake as he accepted what he knew were the other’s terms.
This would match unilateral rectification as well. Cf the difference that knowledge is requried for unilateral rectification, and even with knowledge rectification might be denied.
Rectification: state the rule and give two authorities.
If there is a continuing, common, and subjective (or objective) agreement, the terms of the contract do not match this agreement, nor were they intended to supercede the previous agreement, and there was an outward expression of accord (Jocelyn v Nissen, no need for actual document), then the parties can get rectification.
Chartbrook
Daventry (applying chartbrook)
Unilateral mistake rectification
If A alone is mistaken as to what they agreed and the terms are written down differently, A can get rectification of the term provided B was aware of this mistake (Wimpey) and it would be unconscionable not to rectify.
How does mutual misunderstanding work?
This is where A and B are both mistaken as to the terms. So A would make offer X which looked objectively like offer Y, and B would accept offer Y objecively appearing to accept offer X. Latent ambiguity.
An example is Raffles v Wickelhaus, where the parties were both at cross purposes regarding which ship was going to arrive and it was equally reasonable for both of them to rely on the other’s conduct (ie, same name).
Is it purely objective?
It is unclear (compare Rose v Pim and Smith v Hughes/Hannah Blumenthal), but it seems like it is subjective (hence the snapping up rule), it makes sense based on the purpose of the rule (ie protecting the parties from being misled), and is supported by Chitty.
Mistake as to identity: where A deals with B, who he thinks is B2, face to face then the contract is likely voidable.
Lewis v Avery (this protects an innocent sub-purchaser)
Phillips v Brookes (this is a strong presumption which can be rebutted, note the overlap with misrep).
Note this is not a matter of objective appearance but rather who the party ‘intends’ to deal with (ie, stage one of the identity test).
Where A deals with B, thinking he is B2, in any other way which is not face-to-fact (or by telephone), then the contract is void ab initio.
Shogun Finance
Cundey v Lindsay (letters). Note the divide: was A dealing with the individual who lived at the address from the letter (B), or the individual as described as B2? Apparently the fact there was a name in the letters (or emails if today) was decisive.
What happens when A is mistaken as to B’s identity, but the alternate figure (B2) is fictional?
King’s Norton Metal: there is no contract. In this instance it was held that A had intended to deal with the ‘writer of the letters’, B2, and not just B.
Written documents and mistakes as to identity
Shogun Finance: When the name of the person you are delaing with is written down (certainly when in a contract, but also in negotiations), you are entitled to claim that was the person you wanted to contract with. If it turns out to be someone else then you can claim the contract was void.
Note Lord Millet’s dissent, where he states the distance dealing distinction is poor and that regardless of face-to face or via letter there should be a presumption you intend to deal with the person in front of you or writing the letters, and Lord Nicholls’s, who suggested in this case the innocent purchaser should be protected as the seller, the individual who was misled by the document, had the opportunity to carry out proper checks. (Certainty of document vs protection of third parties).
Rationalisation of the distance distinction/identity cases.
One rationalisation for these cases is on the basis that the quality of identity needs to be important to the purchasers (objectively clear it was a term), otherwise they are just taken to want to contract with whoever they are in front of. So a two stage test: (1) was it important to A to deal with B (and not just anyone, aka in a sausage shop); (2) was it objectively clear this was the case? Note, this is not on mistakes as to terms rules, but on the basis you cannot accept an offer to someone else.
When the party’s name is written down, this is a clear indication (is it?) that the name of the other is important, meeting both 1 and 2 (Andrews). In face-to-face cases it is much harder to establish you care who you are dealing with and not just the person who is front of you (cf certainty point).
Not allowed to snap up a mistake as to identity.
Boulton v Jones: where it is objectively clear to the acceptor (B) that the other (A) intends to deal/make an offer to C, B cannot offer in place of B. Here, A intended to deal with his favorite supplier of moustace oil, B, but unbeknownst to him B had been switched for C. C could not purport to accept this new, mistaken offer.
Chitty makes a good point that these cases are probably outdated as shopping has become industrialised and depersonalised. It is unlikely you care who you buy things from when it comes to shopping centres (albeit cf online retailers with good reviews).
