Table of Contents

Part I – Mistake 5

I – Common Mistake 5

I.I – Common Mistake at Common Law 5

A – Leading Cases in Modern Law 5

Bell v Lever Bros [1932] AC 161 5

Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] 3 WLR 1617 5

B - Steps in the Inquiry 5

1/ Shared mistake 5

2/ Construction 5

a/ Risk allocation to either party 5

William Sindall v Cambridgeshire CC [1994] 1 WLR 1016, 1034, 1035, 1042 6

McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 (HCA) 6

b/ Condition precedent 6

Associated Japanese Bank v Credit du Nord [1988] 3 All ER 902 6

NB Smith, “Contracts - Mistake, Frustration and Implied Terms”, (1994) 110 L.Q.R. 400 6

3/ Fault 6

Associated Japanese Bank v Credit du Nord [1988] 3 All ER 902 6

McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 (HCA) 6

4/ “Substance” of the contract/“fundamentality” 6

a/ Existence of subejct matter 7

Couturier v Hastie (1856) 5 HLC 672 7

b/ Mistake as to the seller’s title 7

c/ Essential quality of subject matter 7

d/ Background assumptions 7

C - Effect of Common Mistake 7

I.II – Common Mistake at Equity 7

A – Rescission on Terms 7

Solle v Butcher [1950] 1 KB 671 8

B – Rejection of the jurisdiction 8

Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd 8

II – Unilateral Mistake 8

A – Mistake as to Terms 8

Hartog v Colin & Shields [1939] 3 All ER 566 8

Smith v Hughes (1871) LR 6 QB 597 8

Scriven v Hindley [1913] 3 KB 564 8

Raffles v Wichelhaus (1864) 2 H&C 906 8

B/ Mistake as to Identity 9

1/ Objectivity (you can’t accept someone else’s offer) 9

2/ Written Contract 9

Cundy v Lindsay (1878) 3 App Cas 459 9

Shogun Finance Ltd v Hudson [2003] UKHL 62, [2004] 1 AC 919 9

3/ Non-existence of the identity assumed 9

4/ Face-to-face dealings 10

Phillips v Brooks [1919] 2 KB 243 10

Ingram v Little [1961] 1 QB 31 10

Lewis v Averay [1972] 1 QB 198 10

C/ Non est Factum 10

1/ Requirements as to the seriousness of the mistake 10

Saunders v Anglia Building Soc (sub nom Gallie v Lee) [1971] AC 1004 11

2/ Requirements as to the nature of the claimant 11

D/ Unilateral mistake at equity 11

III – Rectification 11

Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38 11

Daventry District Council v Daventry & District Housing Ltd [2011] EWCA Civ 1153 11

Part II – Frustration 11

I – Frustration and common mistake 12

*Krell v Henry [1903] 2 KB 740 12

Griffith v Brymer (1903) 12

II – Development of the doctrine 12

Paradine v Jane (1647) Aleyn 26, 82 ER 897 12

*Taylor v Caldwell (1863) 3 B & S 826 12

Jackson v Union Marine Insurance (1879) LR 10 CP 125 12

III – Frustrating circumstances 12

A/ Legal impossibility 13

Metropolitan Water Bd v Dick Kerr [1918] AC 119 13

B/ Physical Impossibility 13

1/ Increased difficulty of performance caused by new and unforeseeable event and not within the commercial risks undertaken 13

*Davis Contractors v Fareham UDC [1956] AC 696 13

2/ Parties should be allowed to know where they stand 13

3/ Performance in the new circumstances radically alters the original rights and obligations 14

*The Eugenia [1964] 2 QB 226 14

C/ Impossibility of purpose 14

Krell v Henry [1903] 2 KB 740 14

*Herne Bay Steamboat v Hutton [1903] 2 KB 683 14

*National Carriers v Panalpina [1981] 1 All ER 161 14

Amalgamated Investment v John Walker [1976] 3 All ER 509 14

IV – Defences to Frustration 15

A/ Express allocation of risk (force majeure and hardship clauses) 15

B/ Implied allocation of risk (foresight?) 15

The Eugenia 15

C/ Self-induced frustration 15

1/ Breach 15

2/ Anticipatory breach 15

3/ Power to elect 15

Maritime National Fish v Ocean Trawlers [1935] AC 524 15

The Super Servant Two [1990] 1 Lloyd’s Rep 1 15

V – Effect of frustration 15

A/ Before the 1943 Act 16

1/ Money 16

Fibrosa v Fairbairn [1943] AC 32 16

2/ Non-monetary benefits 16

Appleby v Myers (1867) 3 B&S 826 16

B/ Under the 1943 Act 16

1/ Money paid or payable 16

Gamerco SA v ICM [1995] 1 WLR 1226 16

- Facts: $775,000 payable by promoters of a concert to the pop group, of which $412,500 was paid before the venue was declared unsafe and contract frustrated. The group had incurred $50,000 and promoters $450,000 in wasted expenses. 16

2/ Non-monetary benefits 17

B.P. Exploration v Hunt (No. 2) [1982] 1 All ER 925 (Robert Goff J) 17

VI – Effect of Renegotiation 17

• If the contract party’s assumption deviates from the state of things at the time of formation mistake

• If the contract party’s assumption deviates from the state of things as they turn out to be due to a subsequent and unexpected change of circumstances frustration

Part I – Mistake

I – Common Mistake

I.I – Common Mistake at Common Law

A – Leading Cases in Modern Law

Bell v Lever Bros [1932] AC 161

A common mistake does not lead to a void contract unless the mistake is fundamental to identity of the contract.

• Facts: D paid 50,000 to terminate the employment of two employees as part of his corporate reorganization. Unknown to D, the employees had breached their contracts, entitling D to dismiss them without compensation. D sought the return of the 50,000 for fraud (failed) or common mistake. The jury found that D would never have paid if they had known the truth, and that the employees were also mistaken because they didn’t have the breach in mind.

• Held (HL, by 3/2 majority): there is jurisdiction to void a contract for common mistake, but in this case the mistake was not sufficiently fundamental to void the contract.

Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] 3 WLR 1617

Sets out test for common mistake to void the contract.

• Facts: T in the business of salvaging ships in difficulty, and when informed of a ship in trouble, hired a ship C that they thought was close by. However, this ship turned out not to be close by and when T found a closer ship, they terminated the contract with C. C sued for damages but T argued that the contract was void for mutual mistake.

• Held (CoA): Mistake wasn’t sufficiently fundamental to void the contract....

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