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NB if there is a mistake, contract is void ab initio (not voidable!).
A fundamental distinction between unilateral and common mistakes:
Unilateral mistakes: mistake by one party as to the terms or identity of the contract
Common mistake: mistake by both parties as to the facts or the law relating fundamentally to the subject matter of the contract
The effect of each category of mistake also differs slightly:
Unilateral mistakes - negative consent, the parties did not in fact reach an agreement.
Contract is sometimes void ab initio, but sometimes it is more accurate to say that there was no contract on the terms apparently agreed.
Common mistakes - mistake renders the agreement ineffective as a contract. Contract is void ab initio.
In PQs on mistakes, if no mistake is found it is worth considering if there has been a misrepresentation. This is especially so if C's 'mistake' is due to a material representation by D, on which C relies.
1 Unilateral mistake
Because of the objective principle—by which we ascertain the intention of the parties objectively, not subjectively—the doctrine of unilateral mistakes is narrow. The law is not concerned with subjective mistakes.
The mistake must be in respect of the terms of the contract, not just the quality or substance of the subject matter of the contract. Also, the other party must know about the mistake the party makes: Smith v Hughes (1871). Facts: D wanted old oats to feed to his racing horses.
He bought a quantity of oats without stipulating that he wanted 'old' oats. D then refused to pay for the new oats and asserted his entitlement to reject the goods delivered and refusal to accept the remaining quantity. P, the seller, sued D. Verdict: Successful. The contract is not void. Even though D knew of the error, the error did not relate to the term of the contract,
only to the quality or substance of the subject matter.
An extension of Smith v Hughes: even if the other party does not know about the mistake, if he should have known, so long as error is in respect of term of contract, then contract is void: Hartog v Colin. On the facts, D must have known that C had wanted to buy hare skins per piece instead of per pound, because their negotiations had proceeded on the basis that price was to be assessed per piece. D mistakenly offered them on a per pound basis. Held:
Price is a term of the contract. Mistake found.
Conversely, where the mistake was not known to and could not reasonably have been known to the other side, the contract is binding in full at the outset, even when it has not yet been relied upon: Centrovincial Estates v Merchant Investors
Where a party's fault is found to be the cause of the mistake, the contract will not be enforced against the other party. Scriven Bros v Hindley (1913). Facts: D, the buyer, was bidding in an auction but had mixed up which lot was which, resulting in an extravagant bid for the wrong lot. When D found out that they did not bid for what they wanted, they refused to pay,
claiming there was no contract. C sued. Verdict: Unsuccessful. There was no contract as the mistake was attributable to C's own fault (by negligence it had contributed to the mistake by laying out the lots in a confusing manner).
The paradigm scenario: B, pretending to be A, sells goods to C. C later sells the goods to a bona fide purchaser, D. B absconds. Question is if A, C, or D has title.
The law now has a choice between two analyses: a) D has acquired good title from C, who has received a 'voidable' title open to rescission, or b) A remains owner because B had derived no title from A which he might transfer to C.
The starting point is to treat written contracts and face-to-face dealings separately, as the case law does Shogun Finance Ltd v Hudson
(i) Where the dealings are face-to-face, the objective presumption is that A intended to contract with the person in front of him, that is, B, so the contract is not void Lewis v
When will this presumption be rebutted? Lord Walker in Shogun Finance v Hudson at
, obiter, gave an example as to when this presumption must be rebutted: "the most audacious form of impersonation would be where a rogue…attempts, face-to-face, to
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