Modern Law Review, Wiley The Modern Law Review

A New Approach to Mistake in Contract
Author(s): Samuel Stoljar

Source: The Modern Law Review, Vol. 28, No. 3 (May, 1965), pp. 265-285
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THE
MODERN LAW REVIEW

Volume 28 May 1965 No. 3
A NEN\T APPROACH TO XIISTAKE

IN CONTRACT
1. INTRODUCTORY
To return to contractual mistake demands more than the customary

apology. Too much has been said to add just another comment on
this or that aspect or yet another criticism of some earlier view.l
This does not mean that the law is in a fit state to be left alone or
that nothing new should be tried. Indeed there is still every need
for an approach which, rather than particular or selective, tries to
go to the roots of things, thus also tries for a more general theory:
a theory (that is) that can more simply explain or realign the cases,
and that can do this iIl terms of a few organising themes that cut
across the whole field, including mistake of subject-matter and
identity, and mistake in equity and common law.
Such a theory would need to introduce a major distinction which
in turn derives from an important ambiguity in the meaning of
mistake. The ambiguity arises because we use the word in, so
to speak, an active and passive sense: in an active sense as when
we say " I unthinkingly wrote down Peter for Paul," and in a
more passive sense ln a statement as " Yes, I gave the wrong answer
because I didn't know." The point of this distinction is not in its
grammar but in what it implies. In the active example the implica-
tion is that the speaker knew the true facts all along, so that his
mistake amounts to little more than a mere oversight, while in the
passive example it is implied that the speaker knew nothing, hence
remained ignorant until the final moment of truth. A very similar
distinction reappears in the context of contractual mistake. For
in advancing mistake as a ground for avoiding contractual liability,
a person may say one of two things. He may say, in the first place,
that the contract now confronting him is not his agreement in fact in
The numerous, often highly polemical, views on mistake are now substantially
listed in Anson's Law of Contract, 21st ed. (1959), pp. 240, 259; and Cheshire
and Fifoot, The Lazo of Contract, 6th ed. (1964), pp. 188, 189, while for the
Arnerican material see Palmer, Mistake and Unjustifed Enrichmcnt (Ohio
(1962), p. 99 and possim.
265
VOL. 28 o
266 THE MODERN LAW REVIEW VOL. 28
that it does not correspond with what was, and is, the parti
contractual intent. (:learly, to recognise such a mistake,
we shall call correspondence-mistake, is simply to recogn
principle of freedom of contract or autonomy of choice, tha
principle that a person is free to select his contractual s
matter or contracting party, pronded (and this is the vital
tion) it is strictly shown that this freedom is exercised befor
after, the bargain is made. A person may say, secondly, tha
contract confronting him contains liabilities he never expec
knew anything about, and thus iporant couid not have agree
all. This latter mistake, which we shall describe as an expect
mistake, raises an argument of no real force. For this mista
not deny that a contract exists, for a contract may exist th
every detail is not provided for; moreover, the mistake
concerns the practical effects of a bargain, in particular the
to which it remains unfulfilled or indeed unfulfillable.
expectation-mistakes, it is true, are not without legal conseq
but this (as we shall see) not on a basis of freedom of co
but on a basis of recognising certain limited exchange-interes
Ir. CORRESPONDENGE_MI8TAKES: SUBJECT_MATTER

We begin with correspolldence-mistakes not ody because the
the only mistakes that take effect in their own right, but also be
they form a sort of logical baseline in the whole area of cont
mistalre. A correspondence-mistalre, we have said, arises wh
offlcial contract does not correspond with what is shown to
parties' true intentions. The simplest example of this is whe
facts conclusively reveal that the parties have misdersto
other and have failed to communicate. In the best-known in
cotton was sold to arrive by a ship named Peerless, neither p
realising that there were two such ships, one sailing in Octob
the other in December: the sale thus related to different cargo
accordingly no contract was held to exist.2 Nor was t
contract in an American case, where a sale concerned "
Jones's land," there being in fact two neighbounng block
party thinking of one, the other of the second block.3 Obvi
they are these decisions illustrate, in a very general way, wh
meant by saying that parties are not ad idem, or are without
consent or that no contract arises or exists. We say these
to indicate that the socalled contract fails to achieve even th
minimal certainty of terms, the terms descnbing the par
subject-matter which the parties purport to buy and sell.4
2 Raffles v. Wichelhaus (1864) 2 H. dc C. 906.
3 Strong v. Lane, 66 Min 94 (1896).
4 One can see that this uncertainty i8 b
the more familiar uncertainfy of tenn
parties instead of agreeing on anything d
to contract: see, e.g., the discussion in
and Cheshire and Fifoot, op. cit.; pp. 34, 35. 2
SI.\Y 1965 A NEW APPROACH TO MISTAKE IN CONTRACT
267
But usually the parties' misunderstanding is never quite so

extreme. Usually they do idelltify a subject-matter, either by
description (by words) or more ostensibly (by pointing), that is,
they identify a particular piece of land or parcel of goods; and,
indeed, with the subject-matter so identified, the parties are con-
tracting, for they will know which premises they are to give or take
possession of or which parcel of goods will have to be " appr
priated " for the purposes of risk or delivery. It is true that though
the parties now know which parcel it is, they still may not kslow
a hat the parcel is, as they may be unaware of its true character, its
size or content or quality. The parties, of course, may provide for
these details in express terms, but if they do not do this they
cannot complain about being mistaken about such a thing, when
they have agreed about this thing. Or, approaching this differently,
a person cannot complain of having been mistaken unless he can
actually show that be never contracted on the terms suggested,
so that there is a real discrepancy between the official contract and
the parties' true or proven intent.
But how can this discrepancy be shown ? Among several possibi-
lities, first suppose that the mistake in question appears to be purely
clerical. Suppose, for example, that in negotiating a lease the
parties definitely agree on a rent of £230, but that by an oversight
the rent named in the contract is £130, an error which is not
discovered until after the execution of the lease.5 Or suppose
that in negotiating the sale of a house, the vendor delivers a plan
that excludes a footway, but an exclusion that is inadvertently left
out in the final conveyance.6 In either case the rule is that the
plaintiff can have the offlcial or formal contract reformed, subject to
the defendant's option of taking the contract as amended or of
having it set aside. This rule falls within the equitable doctrine of
rectification which applies not only to leases and sales but also to
gifts by deed as well as marriage settlements.7 Yet wherever it
applies, the overriding condition in rectification is that the parties'
true intention must be strictly proved: not, admittedly, by
" irrefragable " evidence,8 but still by endence that leaves " no fair
and reasonable doubt." 9 In particular, rectification is unavailable
if all that is shown is that the parties merely desired to alter the
deed,10 or that the other side would not have accepted the contract
5 (rarrard v. Frankel (1862) 30 Beav. 445.

e Harris v. Pepperell (1867) IJ.R. 5 Eq. 1. But distinguish Paget v. Marshall
(1884) 28 Ch.D. 255, as reaards which see further at note 23 below.
7 In the case of gifts and settlements rectification will naturally operate without
any option to the other side. Not, as is sometimes thought, because there is
here some anomaly or because there is a fundamental difference between
situations of purchase and gift; but, rather more 6imply, because the donee
in a gift, or beneficiary in a settlement, does not require the option since he
himself i8 under no reciprocal liability and, in any case, can always repudiato
the gift.
8 Shelburne v. Inchiquin (1784) 1 Br.Ch.Cas. 338 at p. 341
9 Fowler v. Fowler (1859) 4 De G. & J. 250 at p. 265.
Tucker v. Bennett (1887) 38 Ch.D. 1.
2B8 THE MODERN LAW RzVIEt VOL. 28
on any other terms,1l or if there was no intention that " continued

concurrently in the minds of all parties dowIl to the time of the
execution of the deed." 12
Turning to another discrepancy, suppose that an offeree quickly
accepts an offer for the sale of goods at so much " per pound,"
where in the preliminary negotiations (as also in the custom of the
trade) the price was related to so much " per piece." While this
has, rightly, been held to be an operative mistake,l8 the decision was
explained by saying that the buyer must have known of the vendor's
mistake when he " snapped up " the offer as qliickly as he could.lr
But this is a completely misleading ground. Why should not an
offeree snap up an offer as soon as the bargain strikes him as
favourable ? Is he to be reqliired to observe some decent interval or
even to issue a prior warning to the offeror? What, moreover, is
the significance of the oBeree lrnowing or suspecting the mistake?
By so knowing the offeree is not cheating about a term in the
contract, but may merely think, as surely he has a right to think,
that the offeror is hasty or foolish or just ignorant Moreover, such
knowledge can be a completely futile test. For one thing, the
defendant can always brazenly deny that he ever knew or suspected
any mistake. For another, the mistake now in question can be
proved far more objectively. For now we can say that the reference
to " pound " instead of " piece " was, without doubt, a clerical
error, that it was a mere oversight considering what the parties had
been saying during the negotiations and since there was absolutely
no reason to suppose that they had at the last miDute decided to
change the relevant measure from pound to piece. It is this sort
of error, resting entirely on strict and objective proof, that we call
correspondence-mistake . 15
McKenxie v. Coulson (1869) L.R. 8 Eq. 368.

12 FOUSIZeT V. Fowler (SUptG) at p. 265. According to an earlier new, this
antecedent agreement had to be an enforceable contract, but this i8 now an
abandoned requirement: C;raddock Bros. v. Hunt [1923] 2 Ch. 136- United
States of America s. Motor Trucks Ltd. [1924] A.C. 196- and see }eeton
Introduction to Eq?lity, Chap. Z. However, the misconception i8 still rife that
the pIaintiff must show an antecedent contract, enforceable or not; which i8
easy enough where the contracting consists of distinctive stages (e.g., negotia-
tions, agreement, and conveyance), but which becomes an impossible require-
ment where the negotiations merge with the oral agreement. This point iB
further discussed below.
3 Hartog s. Colin j Shields [1939] 3 All E.R. 566.
4 Mainly following Webster s. Cecil (1861) 30 Beav. 62 where a buyer similarly
" snapped up" an offer but concerning which there was also independent
evidence that it was wrongly added up. And 6ee further at note 21 below.
15 It may be observed that the same sort of correspondence-mistake can occur in
gifts, precisely for the reason that we are again concerned with showing a true
as against an apparent intention. Thus a gift may be set aside or rectified if
the donor can show, by reference to prior parleys or to drafts of a deed or
settlement, that he inadvertently included too much money or property in the
gift or that he wanted to benefit X instead of Y: 6ee Walker v. Armstrong
(1856) 8 De G. M. & (}. 531, Re Glubb [l900] 1 Ch. 354 Hood v. McKinnoz
[1909] 1 Ch 476 In quasi-contract, on the other hand, the relevant mistake
is somewhat different from a correspondence-mistake in the above sense. For
where in bargain and gift the mistake concerns a party's true intention, in
M.xs 1965 A NERV APPROACH TO MISTAKE IN CONTRACT 269
If this analysis has been overlooked, one explanation lies in

equity. Since equitable intervention first proceeded upon very
aeneral grounds (briefly, that it was against " equity " or " con-
science " to enforce a contract based on " mistake " or " surprise,"
particularly if the contract proved oppressive too),16 equity, for a
long time, regarded itself entitled to pursue this discretionary line.
In Malins v. Freeman,17 for example, the defendant bought the
plaintiff's land at an auction sale, apparently thinking that the
property belonged to someone else. Evidence was given that the
defendant was greatly flustered as soon as he discovered he had
bought the wrong property; evidence, it is easily seen, that was also
inconclusive, for if it showed that the defendant might all along
have intended to buy another property, the evidencq was quite
consistent with the presumption that it was only after the sale that
the defendant roalised what a bad purchase he had just made. But
while the court fully admitted that such purchase would stand at
common law, they refused specific performance in equity. Later
cases refused specific performance on similarly discretionary grounds,
wherever a party could persuade Chancery that he had been truly
under a mistake, i.e., cases where a party agreed to sell too wide an
area including a building indispensable to his trade,l8 or where the
defendant's clerk had forgotten to add a special premium to the
purchase-price,19 or where a purchaser swore he had been mistaken
about whether a rent was for whole or half the land,20 or where the
party immediately gave notice of his mistake after the making of the
agreement to sell.21 As Romilly M.R. summed it up: " if it appears
quasi-contract the concern is not with intention but with 3 fitatutory or
cu6tomarv or contractual duty to pay that is alreadv existingz and the way this
duty is discharged: 6ee Kelly v. Solari (1841) 9 M. & W. 54; Norwich Union
Fire Ins. Co. Ltd. v. Price [1934] A.C. 445. This was partly perceived by
Foulkes (1911) 11 Col.L.R. 197 at 299 who distinguished between mistakes in
the formation, and in the performance, of contracts. tJnfortunately Foulkes
did not 6ee that this distinction, though explaining the difference between
mistake in contract and gifts and mistake in quasi-contract, did not really touch
upon the difficulties of contractual mistakes and their proof. It is true that at
some points contractual and quasi-contractual mistakes look factually rather
the same, especially where the mistake lies in paying too much or paying the
xvrong man. But the true reason for this is that the instances just given all
represent " active " mistake6. However. whereas in contract it needs an
acti-e mistake to show a party's true intent, in quasi-contract an active mistake
is all that can arise since the mistake is, as it were, both proved and checked
by the exi6ting duty itself. In short, it is one thing to prove an alternative
intention, it is another thing to check how an establishea duty i8 discharged.
16 CalserleqJ s. Williams (1790) 1 Ves.J. 210 at p. 211; Townshend v. Stangroom
(1801) 6 Ves.J. 328 at p. 333; stewaTt v. Alliston (1815) 1 Mer. 26 at pp. 32 33.
" The principle is that it is against conscience for a man to take advantage of
the plain mistake of another, or at least, that a Court of Equity will not assist
him in doing 80": Manser v. Back (1848) 6 Hare 433 at p. 448, per Wigram
V.-C. 17 (1837) 2 Keen 25.
18 Neap v. Abbott (1838) C.P. Cooper 333.
19 Wood s. Scarth (1855) 2 E. & J. 33.
20 Stvat.sland v. Dearsley (1861) 29 Beav. 430.
21 Webstcr v. Cecil (1861) 30 Beav. 62, where the court discovered another iniquity,
namely, that the offer had been " snapped up," the irrelevance of which we
hase already noticed. Nevertheless the decision u-as correct on its own facts.
VOLS 28
270 THE MODERN LAW REVIEW
upon the evidence that there was, in the description of the property,
a matter on which a person might bona fide make a mistake, and
he swears positively that he did make such mistake, and his
evidence is not disproved, this Court cannot enforce the specific
exlforcement against him." 22 Since, furthermore, these results
betokened a general equitable approach, it was extended even to a
case of rectification. In Paget v. Marshall 28 the plaintiff agreed to
let to the defendant four floors of a house at £500 a year. After the
lease was executed, it was found that the deed included a demise of
the lessor's own shop. The court allowed the deed to be rectified,
being much impressed by the hardship to the lessor: " it is plain
and palpable [said Bacon V.-C.] that the plaintiff was mistaken and
that he had no intention of letting his own shop, which he had built
and carefully constructed for his own purposes." 24
This latter resuit requires a special comLment or two. The lessee
had argued, with some merit one would have thought, that he had
been unaware of the lessor's mistake, and that if the deed was to be
rectified, he deserved a reduction in rent. The court disregarded
this argument, and even decreed costs against the lessee whose
opposition to rectification was described as " unreasonable " and
" unjust." 25 Not only did this conflict with an essential condition
in rectification,26 but the decision hardly exemplifies the " substan-
tial justice " between parties, as is sometimes claimed.27 Indeed
this, just as the other equitable decisions, clearly overrides what
must be a central limitation iII any doctrine of mistake, the limita-
tion deriving from the fact that mistake is concerned not with the
misfortune to one party, but with a contract made by both, so tha
the rules governing mistake must hold an even balance between
the two parties concerned. This limitation vas certainly far better
understood in the " commercial justice " pursued at common law.
In one instance,28 for example, a seller had sold specific goods, then
discovered that he had mistakenly submitted a sample of lower
quality, thus considerably overpricing the goods. When th
argllment was that equity would give relief, Campbell C.J. seemed
incredulous: " Would equity at the mere option of the vendor
simply rescind the contract? That is what you ask us to do." 29
Even in eqliity, however, a different doctrine was beging to
The mistake here related to a wrong adding-up, a fact that was easily
proved by evidence dating from before the contract, not just by conduct after
the sale.
22 Swaisland v. Dearsley (supra) at p. 433.
23 (1884) 28 Ch.D. 255.
24 Ibid. at p. 266.
25 Ibid. at p. 267.
26 The condition, namely, that the plaintiff would have to show a common
intention on both sides: see in particular McKenzie v. Coulson (1869) Iz.R.
8 Eq. 368 and at note 11 above. In May v. Platt [1900] 7 Ch. 616 at p. 623
Paget v. Marshall was regarded as an erroneous decision but this not on
sufflciently discriminating grounds.
27 Cheshire and Fifoot, op. cit., p. 216.
28 Scott v. Littledale (1858) 8 E. & B. 815. 29 Ibid. at p-. 821.
271
MAY 1965 A NENV APPROACH TO MISTAKE IN CONTRACT
appear, and instead of diverging from common law,30 equity rather

began to follow it.
The new stage was set by lUorley v. Clavering.3l Here the
defendant agreed to purchase three leaseholds, intending to use the
property for a purpose (opening a restaurant) which, it turned out,
the lease forbade. The defendant resisted specific performance on
the ground that it was a settled rule in equity not to enforce a
contract if, as here, the vendor knew of the buyer's error or at
least suspected it. The court would not hear of this. Since the
parties were on an equal footing, it was for the purchaser to ascer-
tain whether the purchase would serve his purpose or not; at any
rate, the purchaser might have a purpose that was private to him-
self and one he could always change. The well-known decision in
Taaxlplin v. James 32 strongly confirmed these thoughts. A buyer
refused to complete his contract upon discovering that, contrary to
earlier belief, a garden was not part of the property he agreed to buy.
This mistake could easily have been discovered had the buyer looked
at the plans. Nor, as the court insisted, can a defendant " be
allowed to evade performance by the simple statement that he has
made a mistake. Were this to be allowed, a contract could rarely be
enforced upon an unwilliIlg party who was also unscrupulous, for
that person might always escape from completing a contract by
swearing he was mistaken." 83 The temptation to perjury was
further stressed in Van Praagh v. Everidge.34 The defendant mis-
takenly purchased one lot instead of another, a mistake due to his
carelessness but of which he immediately notified the other side.
The court was quite prepared to admit the existence of an honest
mistake, but it saw that this was not exactly the point: " if the
Court relieves this gentleman who honestly confesses his blunder
from performing his contract, that would be inviting someone else
to come here dishonestly to get off his bargain." 85 Moreover, in
specifieally refusing to follow 171falins s. Freeman,36 the collrt gave
the clearest indication how much the equitable approach had
changed. Some of the older cases may still be relevant to the
extent that they exhibit equity's residual power to alleviate a
special hardship, where the parties are not on an equal footing, as
where one party suffers from a particular disability.37 But such
30 The typical illustration was Wood v. Scarth (1855) 2 E. & J. 33, where after
equity refusing specific performance, the plaintiff turned to common law uzhere
his contract was enforce(l: (1858) 1 F. & F. 293.
31 (1860) 29 Beav. 84; 30 Beav. 108. 82 (1880) 15 Ch.D. 2]5.
83 Ibid. at pp. 217, 218, 219. 34 51902 2 Ch. 266.
35 Ibid. at p. 273. The judgment was reverse(l in the Court of Appeal, bllt
another point. It is true that Collins M.R. expressed brief dotlbts as to
correctness of this result, which doubts, honvever, 6eem quite unjustified. A
see on this also Williams on Vendor and Parchaser (3rd ed.), p. 751, as w
as the very careful judgment by Blair J. in Wallace v. McGirr [1936] N.Z.IJ
483 at p. 487.
36 (1857) 2 Keen 25; and see at note 17 above.
37 See, e.g., Torrance v. Bolton (1872) L.R. 8 Ch. 118 where the purchaser was
dea f.
272 TIIE MODERN LAW REV2W VOL. 28
situations apart, the new and stricter approach seems the only
possible, if equity is to be governed not by discretion but by
principle.38
So far we have been dealing with mistake that is often due t

the mistaken party himself. We now turn to certain other mis
caused by the other party who in these circumstances is usually
sendor; moreover caused by a misrepresentation that can be e
fraudulent or innocent. Now misrepresentstion, as everyone kn
today forms a separate rubric, if only to accommodate the m
rules that distinguish the misrepresentation from expressions
opiIlion and so on. Even so, the connection between mistake and
misrepresentation has to be most strongly stressed. Clearly, the
reason why a misrepresentation has legal eSect is not just the
punitive one of the vendor being dishonest or at fault, since the
vendor may be entirely iIlnocent. The true reason rather lies in the
fact that the buyer is simply not gettillg what alone he has agreed
to buy. The prior misrepresentation, it i8 true, is not itself a
contract, nor part of one, but only induces a subsequent contract.
Still, the point is that the subsequent contract thus iIlduced in a
sense ratifies the parties' prior contractual intentions consisting in
part of material representations that turn out to be untrue. Indeed,
the misrepresentation thus incorporates what is a correspondence-
mistake, since there is here an evident lack of correspondence
between the prior contractual intention and the contract as it turns
out.
This close interrelation of mistake with misrepresentation is also
shown in other ways. Thus a contract can be rescinded if the mis-
representation is due to a third person rather than to the vendor. In
Lansdown v. Lansdown 39 the parties exeated a conveyance to
divide their lands, both acting upon a third person's wrong legal
advice. The court ordered the bonds and deeds to be cancelled
since they had been " obtained by a mistake and misrepresentation
of the law." 40 Again, a vendor's misstatement may seem far too
indirect to qualify as a misrepresentation in the accepted sense.
Take Denny v. Hancock 41 which fully illustrates this. Intending to
sell property, the vendor prepared a plan whsch showed the property
as bounded on one side by a mass of shrubs. The purchaser, with
the plan in hand, went to inspect the property, where he found a
belt of shrubs including three magnificent trees, which however
belonged to the adjoining property, though neither the plan nor
the inspection made this clear. He then bid for the property, being
under the impression that the trees were part of it, it being admitted
38 The fact that the eqllitable approach haa in fact changed i8, curiously, far from
generally appreciated, either in the books or by courts: see, for example, Solle
v. Butcher [1950] l K.B. 671 at p. 691. where equity's relevant jurisdiction is
still regarded as predominantly discretionary.
39 (1730) 2 J. & W. 205.
40 Ibid. at p. 206. And 6ee Croper v. Phibbs (1867) L.R. 2 H.L. 149.
41 (1870) L.R. 6 Ch. App. 1.
MAY 1965 A NEW APPROACH TO MISTAKE IN CONTRACT 273
that such trees formed a material part of the value of the property
as a residence. The court refused specific performance on the groulld
that the purchaser had been misled. It transpired that the purchaser
might have had quite another reason for not wantina to complete,
but this the court rightly held did not matter: it did not matter
simply because the mistake was independently proved. A similar
situation can arise in sale of goods. In Scriven v. Hindleg 42 goods
were put up for sale in parcels bearing certain marks. Unknown
to the buyer, these marks svere used both for hemp and tow,
though it was natural to think that these marks would apply to
one thing, but not to the <3ther, nor was the particularity of these
marks explained either in the catalogue or by the auctioneers. Again
the contract was held to be vitiated as the buyer was entitled to say
that he had been misled. Indeed, a correspondence-mistake will
arise wherever the description of property on which the buyer is
made to rely happens to be " improper, insufficient and not very
fair." 43
It will now have been seen that a correspondence-mistake not
only helps to reveal the parties' true contractual intention, and
in this way protects their freedom of choice, it also performs the
much wider function of unifying the relevant field where before we
tended to think in terms of separate approaches and remedies. How
immensely important sllch a unified view can be becomes obvious
from a problem that is posed by Rose v. Pierl.44 Here, very briefly,
the plaintiff wanted to get hold of horsebeans, described as feveroles,
for an overseas purchaser. Not knowing what feveroles were, he
asked the defendant, who told him that they were nothing but
Tunislan horsebeans, which the defendant added he could procure.
After further negotiations the plaintiff then bought from defendant
500 tons of these horsebeans, which however the foreign purchaser
reJected as they were the wrong beans, being feves, not feveroles.
The plaintiff argued that though the written contract only mentioned
horsebeans, what he had really bought were horsebeans of the
feverole type. And the action he brought was one for rectification
to make the contract read " horsebeans (feveroles) " instead of
horsebeans simpliciter, an amendment that he thought would enable
him to sue on the rectified contract in damages. While the lower
court a]lowed rectification, the Court of Appeal thought such remedy
inapplicable: inapplicable because the plaintiff had failed to prove
that the written contract did not correspond with the actual contract
the parties had entered into; indeed, the parties had outwardly
agreed for the sale of horsebeans, not feve101e.s. This decision is not
esy to understand. For the court further admitted that the
42 [1913] 3 K.B. 564.

43 Tcrrance v. Bolten (1872) L.R. 8 Ch. 118 at p. 123; and see also Jones v.
Rimmer (1880) 14 Ch.D. 588. In these cases, moreover, it will be for the
vendor to show that the pttrchaser is not actllally misled.
44 [1953] 2 Q.B. 450.
defendant's assurance that everoles were horsebeans would have

justified either an action for innocent misrepresenation, or one for
breach of an express warranty.45 But, surely, to admit this was
to admit a very great deal, for the admission was merely another
way of saying that the parties had in fact intended to buy and sell
not just horsebeans, but everoles. If so, how could it be argued
that the " outward agreement " was for horsebeans alone? If so,
again, how could one seriously object to a rectification, since rectifi-
cation would do nothing more than incorporate a truth that the
defendant had himself represented or warranted ?
The court, it is true, defended its result by insisting that even if
rectification did not require a prior contract complete in all particu-
lars, it did require a " concluded contract," one showing that the
parties had agreed, not just interzded, on the other terms than those
appearing in the written contract.48 Yet, again, is this not to make
too much, in this context, of any real difference between agreement
and intention ? Once it is clear that the parties did share a mutual
intention, that moreover this was a continuing intention (and con-
tinuing the intention will inevitably be if the innocent misrepresenta-
tion or warranty does inducg the subsequent contract), this mutual
intention then surely amounts to a prior concluded contract.
Perhaps the reason why this has not been seen is that we tend to
think of these common intentions as though they merely were
intention-forming negotiations. while we also tend to think of a
concluded contract as an agreement neatly reduced to paper.
However, when we begin to remember that a written agreement
merely confirms a prior oral agreement, and then begin to analyse
the constituents of that oral agreement, we quickly discover that its
crucial component is a common, continuing intention, even if this is
not usually or formally described as a concluded contract. It must
go without saying that the intention here referred to is an articulate,
not a secret or private intention. Obviously only an articulate
intention can form the basis of a common agreement, whereas a
person's private intention may iIlform his " motive " or " pur-
pose," but cannot by itself become a term in a contract.47
45 The reason why the plaintif3 did not proceed in innocent misrepresentation iB
that this action had become inapplicable since, the goods being disposed of, no
restitt4tio was poBBible. The plaintif3's reason for not suing on the warranty
was that he, quite wrongly, assumed that this w-ould be offering parol evidence
contradicting a written agreement, an assumption based on a misconstruction of
Smith v. Jeffryes (1846) 14 M. & W. 561, a case that had nothina whatever
to do with the present problem: Bee alBo Rose v. Pim [19537 2 Q.B. 450 at
pp. 461462. . J
4B Ibtd. at p. 462, where the court also disapproved of a suggestion that a
continuing intention ccsuld support a demand for rectiScstion. That such a
continuing intention might suffice had not only been mentioned in Crane v.
Hegeman-Harris Co. Inc. [1939] 1 All E.R. 662 at p. 664, but had been
recognised as far back as Fowler v. Fowler (1859) 4 De G. & J. 250, perhap3
the single most important case on rectification.
47 For a somewhat similar point, Bee Smith v. Hughes (1872) L.R. 6 Q.B. 597
at p. 606, per Cockburn C.J.
MAT 1965 A NE\V APPROACH TO MISTAKE TN CONTRACT 275
Rose s. Pi7n illustrates another, more widespread misconception.

While recognising that the parties had been mistaken, even funda-
mentally mistaken, the court felt obliged to disregard the mistake
since the contract itself could not be regarded as non-existent, the
parties having agreed with quite sufficient certainty on the same
subject-matter, namely, had agreed to buy and sell horsebeans.48
The court, in other words, believed that an operative mistake could
never arise unless the contract more or less collapsed as a nullity.
But this was a wrong view of the matter. In a situation such as
the Peerless case,49 previously noticed, the mistake certainly reveals
a practical nullity, in the sense that the parties are so entirely at
cross-purposes that they will not even know what to do in point of
performance. Yet as regards the more typical as also more import-
ant situations, correspondence-mistakes are not at all concerned with
revealing a nullity, but are concerned with showing what is in effect
an alternative agreement, either an agreement that differs in terms
from the official agreement or an agreement that merely supplements
(as in Rose v. Pim) the written contract. In short, correspondence-
mistakess far from denying or nullifying mutual consent, are rather
meant to establish the actual truth about the parties' agreement.
Indeed we need to recognise some such category as correspondence
mistakes to 6e able to make just this point with any clarity.
III. EXPECTATION-MISTAKES: SUBJECT BIATTER
Expectation-mistakes raise other problems. The party complaining

of mistake now relies on a much wider objection. " Can you really
believe," he in effect says, " that I made the kind of contract that
the other side now seeks to enforce against me ? I admit that I can
show nothing in the terms of the contract that would support or
excuse me. Still do you really think that I made a contract to pay
good money for so little in return ? " 0n general principle, needless
to say, this objectioll cannot possibly succeed. Not because there is
here no mistake, for it may be only too obvious that a person is
ignorant or mistaken either about what a bargain meant or how it
would turn out. Rather, the objection cannot succeed because it
would introduce an automatic excuse enabling a person to terminate
a contract whenever he disliked it. It is precisely because of this
that, as we previously argued, even correspondence-mistakes have
to be limited to mistakes that are strictly or objectively provable,
for unless so provable the allegation of mistake, quite apart from
facilitating perjury, would give superior rights to one lrsstead of
equal rights to both parties. Precisely this is also the import of so
basic a decision as Smtth v. Hughes.50 Here, it will be remembered,
a buyer having bought by sample several quarters of oats, then
48 [1953] a Q.B. 450 at pp. 458 45'9 463.
49 Raffles v. Wichelhaus (1864) 2 E. & C. 906, and see at note 2 above.
50 (1871) I.R. 6 Q.B. 597.
voL 23
276 TEE MODERN LAW REVIEW
objected that he had wanted old oats, not the new oats sup
the vendor. Assuming, as was found, that no mention
oats had been made, the buyer got exactly what he had (b
contracted to buy. Similarly in a more recent case,51 wher
ordered an article he specifically described. Samples we
him, and the goods finally delivered satisfied both the de
and the sample. It then appeared that the article was a
not the pure substance that both buyer and seller assumed
But though both parties were thus under a fundamental m
this could not affect the sale since, again, the buyer w
getting what he had bought. In short, a buyer caxlnot bu
and then coxnplain: " I'm sorry, this is not quite what
to have.ss S2
However, if the general principle is straightforxvard, real diffi-
culty arises from the fact that some expectation-mistakes do have
positive legal eiect. Thus a contract has been avoided (to recite
the best-known instances) where a cargo had perished at the time of
saleX58 or money was paid on a life insurance policy where the
assured was already dead,54 or where property sold already belonged
to the purchaserX55 or where a twig proved incapable of doing the job
it was hired for.56 Sensible as they seem, we have nevertheless to be
most careful how these results are to be explained. It is misleading
to argue that such contracts are " nothing but a phantom since
there is nothing upon which they can fasten." 57 It is misleading
because, as repeatedly pointed out, the parties here do make-a
contract in certain enough terms, since they do identify the goods,
or property, or services they are contracting about. Their mistake
rather concerns the egect of a bargain, in particular whether or not
it is capable of being performed. Again, it is not enough to say
(what current explanations constantly repeat) that the contract is
vitiated by a " fundamental fact," ss or by an " underlying assump-
tion," S9 or by a " fact essential to the making of the agreement
and the basis upon which the parties purported to contract," 60 or
because of " an implied condition precedent." 61 For these explana-
tions do not reveal why something is a fundatnental or necessary
51 Harrison & Jones v. Bunten j Lancaster Ltd. [1953] 1 Q.B. 646.

52 " If manufacturers who buy their raw material in a particular trade choose
to order goods, whether ascertained or unascertained, by a description or brand
known in the particular trade, and goods answering to the particular description
or brand are supplied, I cannot see why they should, in the absence of any
misrepresentation or breach of warranty by the seller, have any cause for
complaint": ibid. at p. 658, per Pilcher J.
S8 Couturier s. Hastie (1856) 5 15 .C. 673.
54 Pritchard v. Merchants', etc., Assurance Society (1858) 3 c.s (N.8.) 6aa;
Strickland v. Turner (1852) 7 EaQch. 208; Scott v. Coulson [1903] 2 Ch. 249.
55 Bingham v. Bingham (1748) 1 Ves. J. 126, the best known of many other
examples. 56 The Salvador (1909) 26 T.L.R. 149.
57 Cheshire and Fifoot, op. cit., p. lsa. s-8 Bell v. Lerer Bros. f193
ss Norwich Union Fire I?ts. Co. v. Price [1934] A.C. 455
o° Craven-Ellis s. Canons Ltd. [1936] 2 K.B. 403.
61 Solle s. Butcher [1950] 1 E.B. 671.
SI ss 1965 A N ERN' APPROACH TO MISTAKE IN CONTRACT 277
asstlmption. It cannot be because one side suffers a " fundamental "

disappointment, for this we have seen to be an irrelevant ground.
It cannot be to ascertain the parties' true intentions, for these are
not in dispute at all. Is there then not just one assumption that one
can describe as " necessary " or " basic," namely, the assumption
that is contained in the basic terms in a contract, terms the parties
aareed to with sufficient certainty ?
It follows that the proper explanation cannot be " assumptual "
or " consensual," but must be of another kind. And, indeed, as we
look again at the relatively few expectation-mistakes which the law
has recognised, what we find is that they are excuses granted in
respect of certain unexpected effects of a bargain: moreover, excuses
that perform the very same function as certain other excuses no less
well known. On the promisor's side we have long known a doctrine
of impossibility of performance, while on the side of the promisee
there is a doctrine of failure of consideration, not to mention the
implied-by-law warranties of title or quality.62 The plain purpose
of all these excuses is to protect certain exchange-interests, that is,
protect the promisor against too heavy a loss created by the
unexpected impossibility, or to ensure that the promisee gets at least
something for his money, though this always subject to the wider
principle that prohibits intervention just to make a bargain " ade-
quate. " Seen as excuses, furthermore, the results mentioned
earlier offer little or no difficulty. A buyer is excused to pay for
res extincta or res sua, simply because he would get nothing for his
price as his consideration totally fails. Conversely, a promisor or
seller is excused from having to deliver goods that have perished,
since the impossibility creates exactly the same burden whether it
occurs before or after the sale. In many cases, also, these circum-
stances combine, so as to produce reciprocal excuses, excusing the
one side for impossibility, the other side for failure of consideration.
Unfortunately, these reciprocal excuses, instead of being recog-
nised qua excuses, have come to be explained by saying that the
contract is void ab initio.63 This has proved a profoundly misleading
explanation, in several respects. For one thing, it became tempting
to think that the distinctive feature of mistake was its " voidness "
in contrast to the " voidability " attaching to innocent misrepre-
sentation, a contrast that began to over-separate the two remedies,
a matter to which we shall have occasion to return. For another
thing, the language of " voidness" as it connected with that of
" basic assumption," insinuated the idea that we were here dealing
with a question of mutual consent, not with non-consensual excuses
introduced for the protection of exchange-interests. Precisely this
62 Sale of Goods Act, 1893, ss. 1g15; anfl see Stoljar, " The Dxtrine of Failure
of Consideration" (1959) 75 L.Q.R. 53.
3 Sale of Goods Act, 1893, s. 6.
THE MODERN LAW REVIEW VOL. 28
278
led to the difficulty in the McRae case.64 ThusS suppose th

subject-matter of a contract, i.e., a ship, has ceased to exist
suppose further that the seller, though affected by this initial i
sibility, has not been entirely faultless in that he carelessl
the buyer unnecessary effort and expense. However, if ext
of the subject-matter is taken to vacate and avoid the who
tract, the buyer no longer has a contractual action against the v
The difficulty of course dissolves if we put the question diff
that is, if we ask not whether a contract is void, but whethe
unexpected effects of a bargain should excuse both parties o
the above example) should excuse only one.65 Again, the no
" voidness " supported a distinction between mistake as to
matter, which was " basic " or " fundamental," and mistak
quality that came to be regarded as a mistake affecting one
" motive " rather than both parties' outward consent. I
ways this distinction was harmless, if only because in man
what was called a mistake of motive or quality coincided w
simple bargain disappointments which, we explained earlier
have legal effect, while mistakes as to subject-matter ov
with those cases of res extincta or res sua which gave r
excuse. Yet the distinction was utterly misleading in t
purported to be of general application, when its true appli
was far more limited.
For in many situations the subject-matter of a contract does not
become similarly extinct. In particular, land does not perishS if we
put aside earthquakes or floods 66; nor do events which have already
happened and which can be important in service-relationships, as in
Bell v. Lever,67 a most celebrated case. L. paid B. a large sum of
money to compensate B. for prematurely terminating his employ-
ment as manager of a firm. It was then discovered that B. had
committed breaches of fiduciary duty which would have justified his
dismissal without any compensation at all. The House of Lords
thought that L. could not recover this money; and this because the
mistake related to quality, not to subject-matter; indeed, the parties
having agreed on the same subject-matter, they " must rely on the
stipulations of the contract for protection from the effects of facts
unknown to them." 68 It is difflcult to see what, in these or similar
64 McRae v. Commonwealth Disposals Commission (1951) 84 C.L.R. 377.
85 Such, it will be remembered, was the result in the McRve case itself, where
the seller was held liable in damages. IIowever, to arrive at this result the
court had to find a " condition " that the ship had to be supplied. This was
in fact begging the question, since the case concerned the unespected effects of
a contract, not the breach of an undoubted term, as the court fully admitted
that the facts involved an " element of mistake." Indeed, unless the effects
are completely unexpected, we cannot significant]y talk of mistake, which is
also the reason w-hy mistake is irTelevant in contracts of calculated risks, e.g.,
Holmes v. Payne [1930] 2 S.B. 301, or in contracts of a speculative kind, e.g.,
mininC leases: Jefferys v. Fairs (1876) 4 Ch.D. 448.
66 As to which possibility, see Hitchcock v. Giddings (1817) 4 Price 135 at p. 141,
per Richarde C.B.
67 1930 A.C. 161. 68 Ibid. at p. 224, per Lord Atkin.
NI.\Y 1965 A NE\V APPROACE TO MISTAKE IN CONTRACT 279
circumstallces, a relevant mistake as to subject-matter could have

been. Moreover, the reasoning here overlooked the possibility of
certain excuses, i.e., excuses not concerned with what the parties
actually agreed to, but with a person's right to expect some degree
of contractual fulfilment, especially where (as here) the plaintiff
had paid money on a consideration that totally failed. The House,
admittedly, was not bound to apply in contracts of service the
exchange-standards mainly worked out in sale of goods; but it was
free to do so (and for the sake of symmetry perhaps ought to have
done so), contrary to what the majority believed.
Greater freedom was exercised in a more recent case. In Solle v.
Butcher,69 a flat was let at an annual rent of £250, both lessor and
lessee wrongly believing the flat to be no longer controlled, when it
still was, the controlled rent being £140. The tenant, after two
years' occupation, sought to recover the rent he had overpaid. The
Court of Appeal agreed that there had been a common mistake and
that the lease must be set aside 70 but they seemed to think that
the present mistake could not be given effect to save in equity.7l
Though right in result, this was nevertheless an unsatisfactory
approach. It resuscitated notions about equitable mistake which,
we have araued before, are no longer tenable if they suggest that
equity still has a discretionary jurxsdiction it can manipulate aside
from principle. Also, the discretionary approach obscured the very
exceptional nature of the present case, together with the fact that
in a sale or lease of land a court has exceedingly little room to
intervene. Normally the parties must expressly specify the qualities
about the land they deem material or relevant, for unless expressly
mentioned they are taken to know and to have accepted the property
as it exists.72 Normally, again, the parties can hardly claim to be
economically mistaken about the rent charged, since, on the one
hand, they are free to bargain over the amount and, on the other
(and again disregarding floods, etc.) the rent or consideration will
never totally fail. The one possibility that remains is precisely the
one that happened here: that unknown to the parties a statute had
halved the chargeable rent. It then is clear that the mistaken or
unexpected effects of a contract for land are treated very differently
from those of a contract for goods. Still, the important point now
69 [1950] 1 E.B. 671.
70 Lhis by a majority, one IJord Justice dissenting on the ground that the mistake
n-as one of law. The majority also held that the lease 6hould be set aside on
terms, that is, the lessee had the option of either paying the " proper rent,"
-hich w-a6 the tent originally agreed on (£250), or to " go out ": ibid. at
p. 697.
71 Equity, it was said, " had shown a progressive development," as it allows a
contract to be set aside where it is unconscientious, or snhere one party knonving
the other to be mistaken " lets him remain under his delusion." Indeed, the
court added, had Bell v. Lever been considered on equitable ground6 the
result might have been different: see ibid. at pp. 691-693.
72 See, e.g, Jones v. Clifford (1876) 3 Ch.D. 779; Allen v. Richardson (1879) 13
Ch.D. 524.
VOL. 28
280 TlIE MODERN LAW REVIEW
is that one cannot even begin to understand the relevant diffe

unless we distinguish a separate category of expectation-
that is, the mistake which as a general rule remains inop
except for a few, very few, situations in which certain,
rather limited, exchange-interests are recognised.
IV. CORRESPONDENCE-MISTAKE8: PERSONAL IDENTITY
As we turn to personal identity, what we previously des

correspondence-mistakes assume modified form. The reaso
far to seek. If as regards subject-matter any true lack of
spondence directly affects our freedom of choice, as regards i
the law really begins with a different premise, namely, th
typical case (or, rather, what historically has been the typ
it cannot matter whether there has been a mistake or no
our ordinary buying or selling, it is of no importance
supplier is or who pays for what, provided the supply is satisf
and payment is complete. So that even if in negotiating or
ing a contract, the parties suisrepresent ( say) their weig
age or their names, these personal inaccuracies do not affec
as long as this sale is cash-and-carry and does not involve
or continuing relationship. Against this background it is
agree with Bacon that praesentia corports tollit errorem n
or to agree with Pothler that " consideratioIl of the person
ingredient in the contract." 74
But, of course, there are situations where a person's id
far more material and where personal characteristics do
contractual choice. A party may insist on dealing with one
lar person, or on dealing with all persons except one. An
condition has to be respected, since one may be as selecti
whom one wants to contract with as about what one wan
In Said v. Butt,75 a most telling illustration, a person pr
ticket for a theatre when he knew very well that he woul
entrance, having earlier made llnfounded charges against t
staff. The court had no doubt that this was a contract (o
sion) the theatre owner could repudiate, for " the plaintiff
constitute himself a contractor with the Palace Theatte ag
knowle(lge, and contrary to their express refusal." 76 Mor
ing are the cases where personality assumes importance w
party stipulating any exclusivity. Invariably these case
some kind of continuing relationship in that one party w
trust the other either with credit, or with a special skill, o
continued possession of things or premises. Thus wher
one side is induced by the other's false personal assertion
73 Law Tracts (1737), p 102, cited Ingram v. Littlo 01961] 1 Q.B. 3
74 Pothier, Treaty of Obligations (Evans's trans.), para. 19.
75 [1920] 3 K.B. 497.
76 Ibid. at p. 50B, per MeCardie J.
MAY 1965 A NENV APPROACH TO MISTAKE IN CONTRACT 281
with money or goods, j7 there is no doubt that the former ean reseind
the eontraet (apart from the problem of Cundy v. Lindsay,78 a
problem to whieh shortly we return). Conversely, a borrower ean
repudiate a eontraet with a moneylender who eoneeals his true
identity, sinee this identity ean here be erueial beeause of the added
danger of oppressiveness. 9 Then one ean terminate a eontraet for
the lainting of a portrait where the artist, in faet quite unknown,
has by " verbal eosmeties " turned himself into a famous one.80
Or one ean reseind an agreement for a lease if the lessee has been
less than truthful about himself, sinee (as readers of Jane Austen's
Persuasion will know and as a reeent ease has affirmed) 81 a
tenant's status and eharaeter ean be of vital importanee as he may
tul n out to be cluite undesirable. Similarly one ean repudiate a
eontraet with a person who pretends to aet as an agent when in
truth he is his own principal, the view here being that a person ean-
not really be reliable, if he dare not eontraet his own name.82
Now in many of these situations, it will have been notieed, the
mistake was brought about by deliberate and dishonest misrepre-
sentation, whieh would have permitted the reseission to be put on
the groland of fraud. This, however, is not always so. A mistake
ean be due to a misrepresentation that is innocent rather than
fraudulent, equity providing relief in either ease. Aaain, the mistake
can arise regardless of any mssrepresentation if there is no remedy
for an innoeent misrepresentation, as formerly was the ease at
common law,S3 or if (though this happens more rarely) the mistake
is not eaused by any misrepresentation at all. Suppose, fc)r example,
that D. aeeustomed to deal with X with whom he has eredit, sends
a further order to X but, unknown to him, X has sold his business
to P who aecepts D's order. Here D can repudiate his eontraet
with P: " when a eontraet is made, in whieh the personality of
the eontraeting party is or may be of importanee, as a contraet with
a man to write a book, or the like, or, vfhere there mifflht be set-off,
no other person ean interpose and adopt the eontract." 84 In other
77 Jones v Wuring j Gi110w [1926] A.C 670. 78 (1878) 3 App.Cas. 459.

79 Gordon v. Street [lS99] 2 Q.B. 64l.
80 In9Tam V. Little F1961] 1 Q.B. 31 at p. 57.
81 Sowler v. Potter L194(J) 1 K.B. 271.
82 Bich-erton v. Bu1rell (181fi) 5 hI. & W. 383. The view has somesshat changed
both at common law; S1fine1er v. Stoc1bs (182l) 4 B. & Ald. 437, and in equity;
FelZoues v. Gwydyr (1826) 1 Sim. 63; Nelthorpe v. Holgate (1844) 1 Coll. 203.
Something of the older rries, hozever, reappears in Newborne v. Seels()lid Lt(l.
[1954] 1 Q.B. 4a.
83 Kenne(ly v. Panama Rc,yal DIail Co. (1867) I.R. 2 Q.B. 580; bllt see nou
Leaf v. Internatiowial Gallerzes 1195()] 2 K.B. 86.
84 B)ulton V. JcJnes (1857) 2 H. & 51. 5fi4 at p. 566. per Bramwell B. In this case
the contract had already been completed, P suing for the price for the goods he
had supplied. As it ss-as held that P could not recover the price, w-e must
assume that D had either already disposed of the goods. or that the price was
covered by his set-of v-ith X. \NTithout these assllmptions, the result ss-ould
todav be different, for the law is that goods supplied b- a straner must be
returned. or if not returned, must be paid for according to their value, if not
according to their market-price.
words, a contract becomes terminable not only where th

misleads the plaintiff, but even more importantly wher
dant is unaware that the plaintiff is mistaken, though i
case the plaintiff must prove by other evidence (such as previous
negotiations or the existence of a set-off) that the defendant is
demonstrably not the person with whom he intended to contract.
This shows that we are again dealing with a correspondence-mistake,
though one with a difference. For the lack of correspondence, if a
necessary is not a sufficient condition, since the mistaken party still
has to show that the mistake is material or relevant to the contract
he wishes to terminate.85
There is another point. In many of the situations here considered
the mistake of identity arose where there was merely some danger
about the other person, not yet a danger that had materialised. In
actual fact a person lying about his solvency might actually pay
off his debt; a person pretending to be a mere agent might be more
credit-worthy than the (non-existent) principal; the money-lender
hiding his identity might at least in this case, reveal a warm heart;
while a seemingly disreputable person might, once let into occupation,
lead a perfectly virtuous life. Of course there are cases where one
will not discover one's mistake until the other party actually proves
obnoxious or insolvent.86 But the interesting thing now is that a
coIltract is terminable for mistake of identity if the mistake only
shows that the other side may prove undesirable. And this reveals
perhaps yet another reason why the common law needed a separate
ffioctrine of mistake. Because if a mistake of identity often resulted
from some deception, it still seemed inappropriate to regard this
deception as being a complete iIlstance of fraud or deceit, as the
mistaken party could seek relief on the ground of a probability and
well before any actual damage occurred. To stress this is also to
stress the fact that mistake was indeed a remedy of very broad base.
For provided the mistaken party's consent was vitiated in a material
or relevant particular, it did not matter whether that consent was
described as " void " or " voidable," or whether the mistake
iIlvolved a confusion between one or two persons (what later became
85 In this light, moreover, there can be little objection to Pothier's view that a
contract is not avoided unless " consideration of the person with whom I am
willing to contract enters as an element into the contract which I am
willing to make ": op. cit. para. 19. The statement may appear a little vague,
but it is obvious from other things Pothier says, in this and preceding
paraaraphs, that the " consideration of the person " would not " enter as an
element" unless objectively relevant to the parties' relationship. Indeed it i8
in this sen6e that Pothier has been understood, at any rate by some courts:
see Smith v. Wheatcroft (1878) 9 Ch.D. 223 at p. 230; Gordon v. stTeet [1899]
2 Q.B. 641 at p. 647; Lake v. Simmons [1927] A.C. 487 at p. 501; Said v. Butt
01920] 3 E.B. 497 at p. 502; Dryster v. Randall [1926] Ch. 932 at p. 939-
Sowler v. Potter [1940] 1 E.B. 271 at p. 275; Dennant v. Skinner [1948] 2
E.B. 164 at p. 166.
86 In which case the mistaken party would also have other remedies, such
remedy of the unpaid vendor's lien under which a seller can refuse or
delivery: see Sale of Goods Act, 1893, s8. 39, 41, 44.
SIAT 1965 A NEW APPROACH TO MISTAKE IN COACT
283
the distinction between " identity " and " attribute "). Moreover,
only a broader concept of mistake can really explain two decisions by
the House of Lords that otherwise remain inexplicable: one decision
which took it to be an operative mistake where a firm was deceived by
an impostor into paying money to the latter's nominee,87 and another
that similarly recognised a mistake where goods were wrongly
procured by a person introducing herself as the wife of a fictitious
socialite.88
These points would hardly be worth making had the whole

picture not become radically distorted by a parallel development
that began with Hardman v. Booth.89 The plaintiff called at a
firm by the name of Gandell & Co., and inquiring for Mr. Gandell
was met by one Edward Gandell who was a clerk but not a partner,
the business being exclusively owned by Thomas Gandell. Believing
he was dealing with the firm, the plaintiff eventually sold and
delivered goods to Edward, which goods Edward pledged wsth a
personal creditor. Though clear that the plaintiff had been under
a mistake, the question was whether he could avoid the contract as
against a third party who had given consideration and acted in
good faith The decision was that the goods were obtained not
by a mere fraud, but by larceny by trick, which both destroyed the
contract completely and prevented property from passing to the
purchaser. The reason why this was a trick, not just a fraud, was
that the plaintiff had supposed he was dealing with the firm, without
ever intending to deal with Edward personally. This reasoning was
much confirmed in Cundy v. Lindsay,90 usually regarded as the
most important case of mistaken identity. As this was " in sub-
stance the identical case of Hardman v. Booth over again," 91
larceny by trick was again held to destroy the contract,92 though it
was also said that had the goods been procured by false pretences,
property would have passed to the bona fide purchaser.93
Now this result, it must be admitted, had some justification in
the law as it stood. Given the basic rule of nemo dat quod non
habet, given the fact that the Factors Acts did not here apply,
given further the fact that some deceptions had come to be regarded
as larceny rather than fraud, one could at least understand why
87 Jones v. Waring j G;illow [1926] A.C. 670.

88 Lake v. Simmons t1927] A.C. 487. Eere, admittedly, one may doubt whether
the Houee of IJords correctly interpreted the exception-clause in an insurance
policy which seemed to include transactions of this kind. But this does not
alter the point that the IJords recognised the mistake as such, even if their
reasoning was far from elegant. In particular, IJord Sumner's distinction (ibid.
at p. 509) between defective-but-real and defective-and-unreal consent was
peculiar in the extreme. 89 (1863) 1 H. & C. 803.
90 (1878) 3 App.Cas. 4S9. 91 Ibid. at p. 467.
92 It was a trick, because the cheat had obtained the goods pretending he was a
firm known to the plaintiff. Of the cheat, said Lord Cairns, the plaintiff
" knew nothing, of him he never thought. With him he never intended to
deal": 1bid. at p. 465.
93 For this reason property did pass in King's Norton Metal Co. Ltd. v. Edridge
(1897) 14 T.I..R. 28S, where goods were obtained by a " long firm fraud," the
cheat operating under an alias but there being only one entity.
284 TlIE MODERN LAW REVIEW VOL. 28
property should pass in one but not in the other case.94 Still, it is
important to see that this was a distinction between larceny and
fraud, not a distinction directly defining contractual mistake.
Neither Hardman nor Cundy made much mention of mistake, let
alone suggest that mistake depended on larceny by trick rather than
fraud. However, seeing its context, the trick-fraud distinction
could easily be given a wider twist, so as to intrude upon mistake
itself. This, apparently, first eappens in Phillips v. Brooks,95 where
(very briefly) a cheat fraudulently obtained valuable pearls from a
jeweller by introducing himself as another (existing) person of con-
siderable social prominence. The court was much pressed to hold
this an operative mistake, if only because there was here confusion
in respect of two identities rather than one. Yet the court concluded
that there was no mistake. For the jeweller intended to contract
with a person physically identified, and even if the contract was
rescindable for fraudulent misrepresentation this was quite different
from avoiding it on the ground of mistake. It is true that this
decision, long a subject of criticism, has recently been so radically
distinguished to be practically overruled.96 Even so, this whole
approach has left us with a doctrine (now usually interpreted as the
doctrine of Cundy v. Lindsay) that a mistake of identity must
involve two entities, not only one, so as to make the mistake relate
to " identity," not just to " attribute," which in turn will render
the contract " void " instead of " voidable." It is also true that
in actual fact this doctrine has only been applied to the third party
purchaser, and that aside from him the courts have applied a much
wider view of mistake.97 Nevertheless, the fact remains that even if
the doctrine of Cundy v. Lindsay is technically isolable, its
theoretical implications have been ruinous indeed.
V. CONCLUSIONS
Let us summarise our main points and results. It will be clear that
the analysis here presented argues for a complete reversal of the
auspices under which contractual mistake has generally been con-
sidered. Instead of putting the emphasis on " basic assumptions,"
including " void " or vacated contracts, we have been stressing a
type of mistake that reveals the parties' true contractual intent.
Instead of regarding Cundy v. Lindsay as the prototype of mistaken
identity, we have been far more concerned with a wider view of
mistake under which a contract is terminable if the mistake ss
material or relevant. The centre-piece of this analysis has been a
distinction between two kinds of mistake: on the one hand, corre-
spondence-mistakes which are operative in their own right simply
94 But see the recent criticisms of Cundy v. Lindsay even on this score: Solle v.
Butcher [19SO] 1 E.B. 671; Ingram v. Little [1961] 1 Q.B. 31 at p. 73.
95 [1919] 2 R.B. 243. 96 Ingram v. Little [1961] 1 Q.B. 31.
97 The important examples of this are Jones v. Waring j Gillow, Lake v.
Simmons and Sowler v. Potter, all previously referred to.
NI.Xs 1965 A NEW APPROACH TO MISTAKE IN CONTRACT 285
because a party, by proving an alternative agreement or intention,

thus can overcome his mistake; and, on the other hand, expectation-
mistakes which concern not the agreed terms but the unexpected
effects of a bargain, effects often most disappointing but which the
law cannot redress, apart from a few special situations which how-
ever must be put on a separate basis, that of exchange-interests.
Moreover, by looking at correspondence-mistakes, relating both to
subject-matter and personal identity, we can see that mistake, far
from being a surplus-category (as has recently been alleged), is in
fact a comprehensive doctrine, unifying a field previously divided by
separate remedies; while from a viewpoint of expectation-mistakes
it not only makes sense to say that a mistake can be both " funda-
mental " and ineffective (an assertion that is nearly self-refuting
on traditional grounds,98 according to which a fundamental or basic
error is supposed to make a contract void), expectation-mistakes also
furnish a more clarifying perspective for such problem cases as Bell
v. Lever and Solle v. Butcher, cases which we fully discussed.
The analysis here presented also helps us with certain incidental
misconceptions. Thus we no longer need the void-voidable distinc-
tion, a distinction that not only suggests a false difference between
mistake and innocent misrepresentation, but which gives the notion
of " void " a significance it does not possess. Indeed the notion of
voidness telescopes two quite disparate rules, namely, that res
eactincta give rise to reciprocal excuses and that a third party will
acquire no title, under the doctrine of Cundy v. Lindsay. Again,
we no longer need to differentiate between common and unilateral
mistake: we no longer need to do this since a mistaken party will
either have to prove a correspondence-mistake, where proof will
depend on what the parties said to each other or on the terms
on which they actually agreed, or where the mistaken party will have
to show that he comes within certain exchange-interests that are
protected independently. And, similarly, we can now dispose of the
controversy between the so-called " subjective " and " objective "
approach. To the extent that one purpose of mistake is to protect
freedom of contract or autonomy of choice, the relevant test is
always subjective. To the extent, however, that the function of
mistake is to protect not merely the freedom of one, but the freedom
of both sides, this immediately creates an objective limitation in that
a person cannot complain if a mistake, due to his own ignorance,
only reveals itself after the contract is made. In this way, indeed,
subjective and objective viewpoints are not the playthings of
opposing schools, but become part of the very logic of the criteria
informing ccyntractual mistake.
SAMUEL STOLJAR . *
98 See theve assertions in Solle v. Butcher [1950] 1 E.B. 671 at p. 691; Rose v.
Pim [1953] 2 Q.B. 450 at p. 460; and also Svanosio v. McNamara (1956) 96
C.l,.R. 186 at p. 196.
> PH.D., LL.D.; Professorial Fellow in Law in the Australian National University
in Canberra.

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A New Approach to Mistake in Contract

Author(s): Samuel Stoljar

MODERN LAW REVIEW

A NEN\T APPROACH TO XIISTAKE

To return to contractual mistake demands more than the customary

Ir. CORRESPONDENGE_MI8TAKES: SUBJECT_MATTER

But usually the parties' misunderstanding is never quite so

5 (rarrard v. Frankel (1862) 30 Beav. 445.

on any other terms,1l or if there was no intention that " continued

McKenxie v. Coulson (1869) L.R. 8 Eq. 368.

If this analysis has been overlooked, one explanation lies in

270 THE MODERN LAW REVIEW

appear, and instead of diverging from common law,30 equity rather

So far we have been dealing with mistake that is often due t

42 [1913] 3 K.B. 564.

defendant's assurance that everoles were horsebeans would have

Rose s. Pi7n illustrates another, more widespread misconception.

III. EXPECTATION-MISTAKES: SUBJECT BIATTER

Expectation-mistakes raise other problems. The party complaining

51 Harrison & Jones v. Bunten j Lancaster Ltd. [1953] 1 Q.B. 646.

asstlmption. It cannot be because one side suffers a " fundamental "

led to the difficulty in the McRae case.64 ThusS suppose th

circumstallces, a relevant mistake as to subject-matter could have

280 TlIE MODERN LAW REVIEW

is that one cannot even begin to understand the relevant diffe

IV. CORRESPONDENCE-MISTAKE8: PERSONAL IDENTITY

As we turn to personal identity, what we previously des

77 Jones v Wuring j Gi110w [1926] A.C 670. 78 (1878) 3 App.Cas. 459.

words, a contract becomes terminable not only where th

These points would hardly be worth making had the whole

87 Jones v. Waring j G;illow [1926] A.C. 670.

because a party, by proving an alternative agreement or intention,

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