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Bell v Lever Bros

[1932] AC 161

Case summary last updated at 02/01/2020 16:59 by the Oxbridge Notes in-house law team.

Judgement for the case Bell v Lever Bros

P paid compensation to Ds for dismissing them, but later realised that because of Ds’ activities (unknown until time of dismissal) P would have been entitled to dismiss them without compensation and sued them to recover the money given based on mutual mistake (since both parties assumed that the money had to be paid). HL held that the mistake was not sufficiently fundamental to void the contract. The majority reached this decision by different reasoning. 

Lord Atkin: Mistake can nullify or negate consent. Mistake as to quality does not affect consent unless it is the mistake of both parties AND the changed quality renders the thing “essentially different from the thing as it was believed to be.” Is an agreement to terminate a broken contract of a different kind (i.e. “essentially different”) to an agreement to terminate an unbroken contract? No- The same contract is being set aside/terminated and P received exactly what it wanted (redundancies). It is irrelevant that he (1) could have achieved the same results in a different way (e.g. by suing to terminate) or (2) that P would not have so agreed had the truth been known. Equally if A buys a good from B and B has made no representations but A believes it to be better than it really is and pays a high price, the contract is valid. Same here. 

Lord Thankerton: The mistake in this case was as to the ability to terminate the contracts by other means. The mistake has to be as to an “essential and integral” element of the contract. Not satisfied here. 

McKendrick: V. odd that it wasn’t considered important enough to void the contract. MacMillan’s answer is that during the trial the point about mistake had only come up as a secondary alternative to fraud (not proved) and so P had not collected enough evidence as to how fundamental the breach was. If this is true, we can still apply the principles but NOT use this case by analogy. 

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