CHAR_A01.PDF, page 1-18 @ Normalize ( CHAR_A01.QXD )

(Romina) #1

Summary


Definition


A ‘mistake’ is a false assumption made by one or both parties in the
formation of a contract.


Common mistake


Where both parties are labouring under the same false assumption.



  • Mistake over existence of the subject matter (i.e. whether the goods
    exist) will generally render the contract void – Couturier v Hastie,
    Galloway v Galloway, Scott v Coulson. See for comparison with breach
    of warranty – McRae v Commonwealth Disposals Commission.

  • Mistake over title may invoke an equitable remedy – Cooper v Phibbs.

  • Mistake over the quality of the subject matter (i.e. the value of the bargain)
    will leave the contract intact if the mistake is not ‘fundamental’– Bell v
    Lever Bros, Leaf v International Galleries, Associated Japanese Bank Ltd
    v Credit du Nord, William Sindall v Cambridgeshire County Council.


Mutual mistake


Sometimes known as shared mistake, where the parties are at crosspurposes.



  • Where there is total ambiguity, the contract is void – Raffles v Wichelhaus.

  • Where some ‘extra’ factor exists, the contract may be upheld – Wood v
    Scarth.


Unilateral mistake


Where only one party is mistaken and the other is aware of this (and may
have deliberately planned the situation).



  • Mistake over quality will generally leave the contract intact – Smith v
    Hughes, Scriven v Hindley, Hartog v Colin and Shields.

  • Mistake over identity inter absentes (not in each other’s presence) may
    render the contract void – Cundy v Lindsay.

  • Mistake over identity inter praesentes (in each other’s presence) may be
    seen as one of creditworthiness and will often leave the contract intact –
    Phillips v Brooks, Ingram v Little, Lewis v Averay.


Mistake 197
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