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Law Notes Contract Law Notes

Mistake Notes

Updated Mistake 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).

These were the best Contract Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students with the highest...

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UNILATERAL MISTAKE

Starting point: the OBJECTIVE approach to contractual formation – the fact that one party was labouring under a mistake is usually irrelevant, because subjective agreement is not needed.

BUT there are two exceptions, which allow a party making a unilateral mistake to say that the mistake has prevented a contract being formed:

(i) mistake as to terms; and

(ii) mistake as to the identity of the other party,

in each case as long as the other party knows or ought to know of the mistaken party’s mistake

There is a third exception, a mistake as to the nature of the proposed contract where the mistaken party signs a written contract (‘non est factum).

Where these exceptions are made out, the contract is void:

  • Neither party can enforce it by legal action. So damages are not available for breach of its terms.

  • It cannot transfer title in property, even to an innocent third party.

  • The parties' dealings may have given rise to non-contractual remedies - for example, in tort or restitution.

  • Parties must return any goods and payments transferred to their original owners.

UNILATERAL MISTAKE AS TO THE TERMS OF THE CONTRACT

The doctrine has two elements:

  • It must first be shown that one party made a mistake as to the terms of the offer. In Smith v Hughes, the claimant offered to sell some oats to the defendant. The defendant thought that the oats were old oats and agreed to buy them. They were in fact new oats.

The fact that the defendant thought that the oats were old would not be enough; he must have believed that he was promised old oats by the claimant. If the defendant actually thought that the proposed contract contained a promise that the oats would be old, and the claimant knew of this belief then it would not be reasonable for the claimant to rely on the defendant’s apparent intent. By looking at the actual intentions of the parties, it is clear that the terms of the acceptance do not coincide with the terms of the offer due to the offeree’s mistake.

  • Ie no mistake in this case as no mistake to the terms of the contract, D only knew there was a mistake because of the background information that the oats were for the race horses and thus needed to be old oats

  • No duty for seller to sound out buyer’s mistake, as seller neither said nor did anything to contribute to his deception – Cockburn J

  • Law only gives relief where the other party POSITIVELY INDUCES the mistake ie misrepresentation

  • Second it must be shown that one party knew or should have known of the other’s mistake. For example in Hartog v. Colin [1939] (mistakenly offered hair skins for price per pound rather than per piece. Hair skins usually sold at per piece, C ought to have known there was a mistake), the claim was rejected on the ground that the claimant could not reasonably have suppose that that offer contained the offeror’s real intention – he was ‘snapping up’ an offer that contained an obvious error. Accordingly, it was not reasonable for the claimant to rely on the defendant’s apparent intent. By looking at the actual intentions of the parties, it is clear that the terms of the acceptance do not coincide with the terms of the offer due to the offeror’s mistake.

  • Ie if other party knew or ought to have known (based on objective principles), it is a mistake as to the terms

  • Illustration of objective principle - Centrovincial Estates v Merchant Investors Assurance [1983] as 65k quid offer for rent instead of 126k quid, held no mistake as D did not know and objectively could not have known about the error

When a mistake is triggered by the claimant’s fault (e.g. if the offer is confusing), the claimant will be taken to have known of the defendant’s mistake (Scriven v Hindley, auction bidding confusing, thought buying something else and C had contributed to the mistake – held C known about D’s mistake)

When these two elements are present, on an objective interpretation of the terms of the purported acceptance (i.e. how the terms of the purported acceptance appeared to a reasonable person in the offeror’s position), the terms of the purported acceptance do not coincide with the terms of the offer due to the offeree’s mistake. The contract is thus void.

  • But if mistake not known to or could not reasonably have been known to the other side (ie cannot claim for mistake) -> contract is binding in full from the outset, even if it has not been relied upon (ie even if no reliance, still can’t withdraw from contract)– Centrovincial Estates v Merchant Investors Assurance [1983]

Raffles v Wichelhaus (1864) (Peerless) – seen as a case of unilateral mistake due to “latent ambiguity”, there was never any consensus reached

UNILATERAL MISTAKE AS TO IDENTITY

An offer can only be accepted by the person that it is addressed to. If the offeror makes an offer to A, because the offeror thought A was B, we must ask whether it reasonably appeared to A that the offer was addressed to him. If it does not reasonably appear to A that the offer was addressed to him, there is no valid contract. Ie if not reasonable that offer addressed to A, no contract

Where the offeror knows that A is A, but is merely mistaken about A’s attributes – there is no offer/acceptance problem and so a valid contract ensues. For example, in Fletcher v Krell [1873], the defendant agreed to act as a governess under the mistaken impression that the claimant had not been married. In fact, the claimant was divorced. The claimant brought an action for breach of contract and the defendant resisted the claim on the ground of mistake. The defence was rejected by the court, as the mere concealment of a material fact, except in cases of insurance policies, does not avoid a contract.

However, if the fact that A is who he says he is or possesses a particular attribute is so important to the offeror that the offer is only directed to A on condition that A is who he says he is or possesses that attribute, then we can say that a reasonable person in A’s position...

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