If Mistake is found, the contract is rendered void.
II. Categories of Mistake
Where both parties to the contract make the same mistake. Each is fully aware of the intention of the other but each person makes a mistake as to some underlying and fundamentalpart of the contract
Where the parties are at cross-purposes, but each believes that the other is inagreement
Where one party makes a mistake and the other is aware of the error
3 types of mistake but 2 general categories?
A. Agreement is reached (meeting of minds) but there is something which fundamentally robs theagreement of its efficacy (common mistake comes under this.)B. Agreement is never reached (O and A never coincide. No meeting of minds. A unilateral mistakefalls into this second category where agreement is not reached at all.
III. Agreement is reached but lacks effectiveness
2 things to bear in mind
the mistake must be fundamental. Secondly, the state of affairs mustvebeen in existence prior to the conclusion of the contract. (This second one is really important.Compare lectures on mistake with the doctrine of frustration of contract)
1. Mistake as to the existence of subject matter -
The leading case is
 5 HLC 673
Contract was for sale of corn in transit whobelieved the corn existed when the contract was formed. However, the cargo was rotten and hadalready been sold by the captain. HL said if the subject matter of the contract did not exist atformation, the contract could never be formed and was void.However, in the case where one party actually guarantees the existence of the subject matter,mistake as to the subject matter has not sufficed to set aside the contract and the contract is valid.
Commonwealth Disposals Commission
(1951) 84 C.L.R. 377 (Australia)So, you can rely on common mistake as to the subject matter where
1. It must be a belief which isunderstood by the party without any reasonable grounds of believing otherwise 2. One of theparties must not be responsible for implanting the mistake in the mind of the other.s6 Sale of Goods Act 1979where there is a contract for the sale of specific goods, and the goods, without the knowledge of the seller, have perished at the time when the contract is made, the contract is void