MISTAKE

Two types – mistake at common law, mistake in equity.

Mistake at common law

Unilateral mistake [ a mistake of one party only]
Bilateral mistake [ a mistake of both parties]
 If the mistake is an operative one, the contract is void; meaning no property or
obligations can arise.

1. BILATERAL MISTAKE
Two types –
mutual mistakes- each parties is mistaken, but they do not share their mistake [no contract can
arise because there is an absence of agreement] Raffles v Wichelhaus (1864) -
common mistakes – both parties enter a contract sharing the SAME MISTAKE, which
nullifies their contract. [ the parties do initially reach an agreement but that agreement maybe
subsequently set aside on the ground of parties’ shared mistake.] Bell v Lever Brothers [1931] -
VOID

Common mistake
common mistake as to subject mater [ non-existence of the subject matter]
res extincta.
Parties try to deal with a subject matter which unknown to either party does not exist.
Ex; A contracts B to sell his horse unknown to both the horse dies. Therefore it is impossible to
sell.
Couturier v Hastie [1856] – in a contract of sale of good, where the goods have perished
without the sellers knowledge, the contract is void. [s.6 SGA]
s.6 of SGA applies to the goods that have perished. It will not apply to goods which the parties
thought existed but in fact it never did.
common mistake as to a state of affair.
1. Mistake as to ownership – sale of res sua
Parties decide to sell something which unknown to either of them is owned by the buyer.
Cooper v Phibbs [1867].

2. Mistake as to the possibility of performance

In some situations parties would have been mistaken to the possibility of the performance of the
contract.
Tritel divided it into 3 types of impossibility
a. Physical impossibility – sheikh brothers ltd v Ochsner [1957]
b. Legal impossibility - Cooper v Phibbs [1867].
c. Commercial impossibility- Griffith v brymer [1903]

3. Mistake as to a quality of the subject matter

This a difficult area of law of mistake. A very few cases are found to void. Bell v Lever
Brothers [1931].

2. UNILATERAL MISTAKE.

The courts a generally unwilling to find that a contract is void at law where the mistake is the
mistake of one party, because it affects the non-mistaken party.
Therefore, the courts will only find the contract void in one of two following situations.
a. If the non-mistaken party is aware of the other party’s mistake and proceeds to contract
anyway. [aware of the mistake and tries to take advantage]
b. The non-mistaken party has created the mistake to induce the mistaken party to contract.
[Eg; mistaken identity].

Mistaken assumptions or promises.

Mistake could be made by the offeror or the offeree as to the term of the contract and mistake is
known to the other party.
The offeror may when making the offer make a mistake when expressing the terms of the
offer, even though it is so visible to the offeree that the offeor is proceeding upon a mistaken
basis he proceeds to accept, in such a situation the court will find the contract is void. These are
cases where one party 'snaps' at the obviously mistaken offer of another
Hartog v colin and shields [1939] – offeror made a mistake as to the payment term. Animal skin
was intended to be sold per piece but mistakenly offerd to sell per pound. Offeree was aware
therefore it is void.
Smith v hughes – offeror was unaware, no mistake.

Mistakes as to identity

The case of Shogun finance v Hudson [2003] – in a face-to-face contract identity of the person
is immaterial as they see one another. However, in a non-face to face contract the identity is
important.
Eg; a dishonest person deceives a vendor and buys a product and gives a fake cheque. Vendor
requests the goods back and to see he discovers
 The rogue for what he is
 That he has vanished
 The rouge has sold it to a 3rd party. – if the vendor needs the goods he will have to litigate
against the innocent 3rd party. If the contract between the rouge and vender is good, the
cost will be borne by the vendor because if the contract is good there is good ownership.
If the contract is void then the cost will be borne by the 3rd party because there was no
good title.
If the contract is not void for mistake, then it is void for misrepresentation. However it should be
done before the rouge contracts with the 3rd party.
For mistake relating to identity to be operative:
1. The identity of the person should be material to contract [non-face-to-face ocntracts] and
the mistake should not be regarding the person’s attributes.
2. If identity is material then the claimant should have in actual facts made a mistake
[ thought of someone and delt with another]
3. The rouge should be aware that the claimant is making a mistake.
Cundy v Lindsay (1878) - if A thinks he's agreed with C because he believes B with whom he is
negotiating, is C and B is aware that A did not intend to make any agreement with him and if A
has established that the identity of C was a matter of crucial importance to the contract, then the
contract will be void

Documents signed under a misapprehension as to their contents.

This is where one party pleads that he believed the document to be one but later realized that the
document was different in nature. He could plead non est factum. [this is not my deed].
This plea is difficult because normally a person must take full responsibility for the signature.;
L’estrange v graucob. The burden will be on the mistaken party to prove that all due care was
taken.
Foster v Mackinnon.

MISTAKE IN EQUITY.

Equitable relief takes 3 forms.

1. Rescission
2. Rectification
3. Specific performance.