CONTRACT LECTURE 10

MISTAKE IN CONTRACT

LOS WATKINS
 WHAT IS A MISTAKE IN CONTRACT?

• COMMON MISTAKE - WHERE BOTH PARTIES MAKE THE SAME

MISTAKE

• MUTUAL MISTAKE - WHERE THE PARTIES ARE AT CROSS PURPOSES

• UNILATERAL MISTAKE - WHERE ONLY ONE PARTY IS MISTAKEN 

 COMMON MISTAKE

RES EXTINCTA - THE SUBJECT MATTER OF THE CONTRACT NO LONGER EXISTS

RES SUA – MISTAKE AS TO TITLE, WHERE THE GOODS ALREADY BELONG TO THE

PURCHASER

MISTAKE AS TO QUALITY - ONLY AVAILABLE IN VERY NARROW LIMITS

 CASES

OPERATIVE
AMALGAMATED INVESTMENT AND PROPERTY CO LTD V JOHN WALKER & SONS LTD [1977]

RES EXTINCTA
SCOTT V COULSON [1903]
COUTURIER V HASTIE (1856)
MCRAE V COMMONWEALTH DISPOSALS COMMISSION (1951)
TRIPLE SEVEN LTD V AZMAN AIR SERVICES [2018]
ASSOCIATED JAPANESE BANK (INTERNATIONAL) LTD V CREDIT DU NORD [1989]
TRIPLE SEVEN LTD V AZMAN AIR SERVICES [2018]
1. AT THE TIME OF THE AGREEMENT OF THE CONTRACT, AN ASSUMPTION AS TO THE EXISTENCE
MUST BE SHARED BETWEEN THE PARTIES
2. THIS ASSUMPTION SHOULD BE FUNDAMENTAL TO THE CONTRACT
3. THAT ASSUMPTION MUST HAVE BEEN INCORRECT
4. BECAUSE THE ASSUMPTION WAS WRONG, THE CONTRACT (OR ITS PERFORMANCE) WILL BE
ESSENTIALLY AND RADICALLY DIFFERENT FROM WHAT THE PARTIES BELIEVED IT TO BE.
5. ALTERNATIVELY, THE CONTRACT MUST BE IMPOSSIBLE TO PERFORM (IN OTHER WORDS, THERE
MUST BE A FUNDAMENTAL DIFFERENCE BETWEEN THE ASSUMED AND ACTUAL STATE OF AFFAIRS)
6. THE PARTIES WOULD NOT HAVE ENTERED INTO THE CONTRACT HAD THE PARTIES BEEN AWARE
THAT THE COMMON ASSUMPTION WAS WRONG
7. THE CONTRACT MUST HAVE NOT MADE PROVISION IN THE EVENT THAT THE COMMON ASSUMPTION
WAS MISTAKEN
 CASES

RES SUA
COOPER V PHIBBS (1867)
SOLLE V. BUTCHER [1950]
GREAT PEACE SHIPPING V TSAVLIRIS (INTERNATIONAL) LTD. [2003]

QUALITY
BELL V LEVER BROS [1932]
LEAF V INTERNATIONAL GALLERIES [1950]

POSSIBILITY
SHEIK BROS LTD V OCHSNER (1957)
 MUTUAL MISTAKE

MUTUAL ASSENT?

SCRIVEN BROS V HINDLEY & CO [1913]

RAFFLES V WICHELHAUS (1864)

 UNILATERAL MISTAKE?

1. TERMS OF THE CONTRACT

2. IDENTITY OF THE CONTRACTING PARTY:

INTER ABSENTES (AT A DISTANCE)

INTER PRAESENTES (FACE TO FACE)
 CASES

TERMS OF THE CONTRACT

HARTOG V COLIN & SHIELDS [1939]
SMITH V HUGHES (1871)

IDENTITY INTER ABSENTES

CUNDY V LINDSAY (1878)
KING'S NORTON METAL CO LTD V EDRIDGE; MERRETT & CO LTD (1897)
SHOGUN FINANCE V HUDSON [2003]
 CASES

INTER PRAESENTES

PHILLIPS V BROOKS [1919]

INGRAM V LITTLE [1961]
LEWIS V AVERY [1971]
 NON EST FACTUM

FOSTER V MACKINNON (1869)

SAUNDERS V ANGLIA BUILDING SOCIETY [1970]

 REMEDIES

RESCISSION AND RECTIFICATION

THE COUNCIL OF THE BOROUGH OF MILTON KEYNES V. VIRIDOR (COMMUNITY RECYCLING

MK) LTD [2017]

SWAINLAND BUILDERS LIMITED V. FREEHOLD PROPERTIES LTD [2002]