Discuss the various forms of mistake and misrepresentation.

Contract law is a legal area that deals with the formation, interpretation, and enforcement of
agreements between parties. Under the contract law we have two main branches which are
void and voidable contract laws.

Voidable contracts are contracts that appear valid at first, but one party can choose to cancel
them due to legal reasons. The "innocent" party can enforce the contract if they choose not to
void it. Misrepresentation and mistakes are some of the reasons for voiding a contract.

1) MISREPRESENTATION

A misrepresentation is an untrue/ false, statement made by one party to another in order to

induce the other party to agree into a contract. It is important to know that a
misrepresentation is made to induce a contract therefore it is a false statement made before
the actual contracting.

An innocent party who has been included to enter into a contract can set the contract aside or
claim damages whilst he stands by it. But for one to be able to set a contract aside on the
basis of a misrepresentation he has to prove the following:

a) The misrepresentation must have been made with intention to induce the other party to
enter into a contract. It should be a mere puff or simplex commendation which is a statement
made before contracting which the maker does not intend you to take it seriously and which
statement has no legal consequences. Thus where a seller depicts the subject matter of the
sale with glowing colours, it is not a misrepresentation. An example would be where the
seller says “My bicycle can really fly”. Here the maker of the statement does not have
intention to be sued if the bicycle does not fly. Another question is whether if someone keeps
silent about a contract to be entered into, he can be sued for having misrepresented. The
answer is that silence will only amount to a misrepresentation only where there is a duty to
speak.

b) The other party should actually have been induced to contract relying on the
misrepresentation. Thus where on enters into a contract for other reasons not because of the
misrepresentation then he cannot set the contract aside on the basis of misrepresentation.
 c) The statement must be false in fact. A mere statement of opinion, although it might be
false, may not be a misrepresentation. Thus in Lamb V Walters 1926 AD 35 an opinion by
the seller that the price was fair and reasonable was held not to be a misrepresentation
although – it was false as the price was too high. On the same note a misrepresentation as to
the position of the law does not amount to a misrepresentation.. The logic is that no one can
be lied to about the position of the law because everyone is presumed to know the law and
also that ignorantia juris neminem non excusat ignorance of law is not a defence.

d) The misrepresentation must be material. A material misrepresentation is one which is

likely to induce another one in to contracting. Where one can establish the existence of the
above mentioned facts then he should be allowed to set the contract aside on the basis of
misrepresentation.

However it is also noteworthy that misrepresentation has about three basic types which are:

i. Fraudulent Misrepresentation: This is the most serious type, involving deliberate

deception or fraud. Here the representor is fully aware that he is not telling the truth but
he misrepresents so as to try and persuade the other party to enter into the contract.
Dibley V Furter 1951 (4) SA 73. Furter sold to Dibley a four acre farm without disclosing
that one acre was a recent graveyard which had been ploughed over. The court held that
Dibley could avoid the contract because this amount had fraudulent misrepresentation by
willful non disclosure. Where the other party withholds information e.g. where there is a
latent defect with object the other party just withholds without a hidden agenda.
ii. Negligent Misrepresentation: This occurs when someone makes a false statement
without taking reasonable care to ensure its accuracy. Here, there's no intention to
deceive, but carelessness. The representor makes his statement so carelessly without
considering or investigating whether it is true or false and this statement turns out to be
false after it has induced another party to contract.
iii. Innocent misrepresentation This is where the representor makes a false statement to the
other party without fault. The representor genuinely believes that he is telling the truth
and has explored all avenues to establish the correctness of his statement and genuinely
believes it to be true but it however turns out to be false.
.

Remedies for Misrepresentation:

•a) Rescission For all types of misrepresentation the innocent party is allowed to resale from
the contract. By rescission the contract is treated as cancelled. The parties are returned to the
status quo ante, i.e. to their original position as if they had not contacted at all. The parties
should however be prepared to re store whatever they had benefited under the contract. This
is called Restitution.

b) Damages For one to be able to claim damages for the loss that he has suffered because of
the misrepresentation he should establish first that it is fraudulent or negligent
misrepresentation. Thus one cannot claim damages in addition to rescission if it is innocent
misrepresentation. For fraudulent and negligent misrepresentation the injured party can be
allowed to claim damages after cancelling the contract. The damages are usually paid in
monetary terms.

c) The innocent party may however decide not to cancel or rescind the contract but may only
claim damages whilst he abides by the contract

2) MISTAKES

. Mistake exists where parties to a contract think that they have agreed when in actual fact
they have not. For a party to be able to set a contract aside on the basis of mistake he has to
establish the following elements of Mistake (for voiding a contract) include the following:

 Mistake about a material fact: The mistake must concern a significant fact that would
have influenced a reasonable person's decision to enter the contract.
 Both parties shared the mistake (for mutual mistake): In a mutual mistake, both parties
must be mistaken about the same key fact.
 The mistake was reasonable: The mistake should not have been due to negligence or a
lack of due diligence on the party claiming the mistake

The following are the main types of mistakes in contract law, supported by some famous
cases and potential remedies:
 i. Unilateral Mistake This occurs only when one of the parties is labouring under some
misapprehension i.e. one party is mistaken and the other is not. The general rule is
that a party who is mistaken under unilateral mistake cannot set the contact aside on
the grounds of mistake unless it can be shown that the mistake is Justus i.e. justifiable
and reasonable Mabhena V Bulawayo Polytechnic College H.B 22 – 94. The
applicant was admitted to a cookery course at Bulawayo College. The applicant had 3
Zambian Ordinary Level subjects. The college’s minimum requirements were 5
Ordinary Level subjects. The applicant was admitted by mistake. The college now
intended to expel her and she sued. The court stated that before a party can opt out of
a contract on the grounds of unilateral mistake it has to be shown that the mistake is
reasonable. It was held that the college would not opt out of the contract because the
mistake was neither justified nor reasonable. Common mistake This exists where both
parties are mistaken. There they would be thinking that they have agreed when in
actual fact there is a common mistake on either side courts have usually allowed both
parties to set such a contract aside. The academic argument which is well founded is
that such a contract should be treated as void because one of the requirements i.e.
consensus ad idem is missing.
ii. Mutual Mistake: Both parties to the contract have a mistaken belief about a
significant fact that forms the basis of the agreement.

Case Example: Great Peace Shipping Ltd v Tsavliris (International) Ltd (2002) - A ship was
chartered to transport sunflower seeds, but both parties were unaware the seeds would emit
harmful fumes. The court found the contract was void due to the mutual mistake about a
critical fact.

iii) Common mistake This exists where both parties are mistaken. There they would be
thinking that they have agreed when in actual fact there is a common mistake on either side
courts have usually allowed both parties to set such a contract aside. The academic argument
which is well founded is that such a contract should be treated as void because one of the
requirements i.e. consensus ad idem is missing. That a mistake of law does not invalidate a
contract was held in Ncube V Ndlovu 1985 (2) RLR 281. The appellant seduced a major
daughter of the respondent. The appellant then signed an agreement undertaking to pay the
respondent damages for seduction. He wanted to avoid the contract on the basis that he was
mistaken as to the law i.e. he did not know that a father has no right to sue for damages in
respect of seduction damages of a major daughter. The appeal was dismissed because this
was a mistake of law not a fact.

CONCLUSION

Mistakes and misrepresentation are both legal concepts that can impact the validity of a
contract. They are both similar in that both mistakes and misrepresentation involve a
misunderstanding about a key fact that influences a party's decision to enter a contract. They
can potentially lead to a contract being void (no legal force) or voidable (one party can
cancel).

However, their difference comes when

 Misrepresentation: Involves a false statement made by one party, whereas a mistake is

simply an erroneous belief.
 Intent: Misrepresentation can be fraudulent (intentional lie), negligent (careless
statement), or innocent (honest mistake). Mistake has no element of intent.
 Knowledge: In some cases of unilateral mistake (only one party mistaken), whether
the other party knew or should have known about the mistake can be crucial.
 Impact: Fraudulent misrepresentation is generally the strongest ground for
challenging a contract. Innocent mistakes are the least likely to void a contract.

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