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Law Notes Contract Law Notes

Is There Actually A Doctrine Of Mistake At All Notes

Updated Is There Actually A Doctrine Of Mistake At All Notes

Contract Law Notes

Contract Law

Approximately 1511 pages

Contract law notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB contract law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).

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Is there actually a doctrine of mistake at all?

The “offer and acceptance” view

  • With unilateral mistake

    • Slade: if parties are said to have objectively agreed on something and neither is aware of the others actual intentions

      • Then the contract is formed

        • There is no question of “mistake” unless the conduct of that mistake shows that there is objectively, to a reasonable man, no agreement.

    • Only where V meant to make an offer or acceptance in one sense

      • And E is aware of this

        • Can E not hold V to the contract

          • E.g. Hartog v Colin & Shield’s:

            • Singleton J: the offer was wrongly expressed and D by their evidence have satisfied me

              • that C could not reasonably believe the offer contained the offeror’s real intentions

        • Slade: decision is based not on C’s knowledge of the seller’s mistake

          • But because there was no consensus of the terms of the contract

        • Moi: takes a rather simplistic view of things – surely courts were also looking unfavourably on the “snapping up” of the offer by C which showed clear knowledge of D’s mistake

          • Both, on paper, were agreeing to the same thing.

The “implied terms” view

  • Questions of mistake = merely questions of risk allocation which in turn are questions of construction

    • Slade’s view

      • If a contract is avoided then this is because parties have themselves provided this solution impliedly from the contract itself

        • Not because the law has imposed this – courts can only discover what to do from the intentions of the parties themselves

      • Bell v Lever Bros:

        • Lord Atkin: the proposition does not amount to more than this –

          • that if the contract expressly or impliedly contains a term that a particular assumption is a condition of the contract

            • The contract is avoided if the assumption is not true

  • Policy reasons dictate this should be the case:

    • Mistake should not be used to get out of a bad bargain/undermine risk allocation of contract

    • Need to promote certainty by upholding parties’ apparent (objective) intention

    • Need to reward more knowledgeable parties and allow them to take advantage of the less knowledgeable in a free market system

    • Means courts don’t appear to be interfering with the contract

  • Rejection of this view

    • Chen Wishart:

      • Uncertain

        • When will this “self destruction” condition be implied?

          • Is no clearer than determining when a mistake is fundamental enough to void contracts

      • Illogical reasoning

        • Contract is void (a nullity from the beginning of the contract) because parties have put implied term in void contract that says so?

    • Concepts similar, but distinct

      • Great Peace Shipping Co Ltd v Tsavliris Salvage Ltd [2002]

        • Lord Phillips:

          • Just as the doctrine of frustration only applies if the contract contains no provision that covers the situation,

            • the same should be true of common mistake.

          • If, on true construction of the contract, a party warrants that the subject matter of the contract exists,

            • there will be no scope to hold the contract void on the ground of common mistake

          • BUT The theory of the implied term is as unrealistic when considering common mistake as when considering frustration.

            • Where a fundamental assumption upon which an agreement is founded proves to be mistaken,

              • it is not realistic to ask whether the parties impliedly agreed that in those circumstances the contract would not be binding.

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