Mistake - CONTRACT LAW

• Two types:

• 1. Each party is mistaken, but do not share their mistake

  2. The parties share their mistake

The parties are each mistaken but don’t share the mistake, the offer and acceptance doesn’t correspond and so there is an absence of agreement and no contract exists.(cross purpose).

-Raffles v Wichelhaus 1864(Peerless)

Occurs where both parties to a contract make the same mistake about a critical element of their agreement.

-Bell v Lever Bros. 1931(consensual theory of contract)

Unknown to either party the subject of contract doesn’t exist.

-Couturier v Hastie 1956, (corn)

In a contract for sale of goods, SGA 1979 S.6 applies, ‘where the goods have perished without the seller’s knowledge, the contract is void.’

Different interpretation as in:

• McRae v Commonwealth disposals commission 1951(Australia)(Purchased tanker didn’t exist at given location) the Aussie High Court expressed doubt that Couturier involved issues of mistake and that case was about construction of contract entered.

• McRae was a contract of chance.

• The McRae approach was approved in Great Peace Shipping 2002

Res Sua: Unknown to either party, the item is already owned by the buyer, and hence the agreement can’t be performed

-Cooper v Phibbs 1867 (legal impossibility) Impossibility of performance of contracts sue to

1. Cases of physical impossibility

2. Cases of legal impossibility

3. Cases of commercial impossibility

Mistake as to quality of the subject matter:

- Bell v Lever Bros. 1931(termination of contract, compensation) :

The mistake was a bilateral one as to a quality of the subject matter of the contract. The subject matter of the termination contract was the employment contract and the particular quality was the terminability of the employment contract at Lever Bros option.

HoL: Mistake as to quality of the subject is a case mistake will not affect assent unless it is the mistake of both parties, and is to the existence of some quality which makes the thing without the quality...