Mistake 125soon as the contract was made and so the goods will then have been at his risk. If this is
the case, the buyer will therefore have to pay for the goods. (See SGA 1979 s. 18, rule 1 on
p. 186.) If, after a contract to sell specific goods was made, the risk had not passed to the
buyer at the time when the goods ceased to exist the contract would not be void for mistake;
the seller would be in breach of contract.
However, if the goods had perished s. 7 SGA 1979 would cause the contract to be
frustrated (s. 7 is explained on p. 189).
Common mistake as to ownership of goods
A common mistake as to the ownership of goods will not generally make the contract void.
In Chapter 3 we saw that s. 12(1) of the Sale of Goods Act 1979 implies a term that the seller
of goods owns the goods. A seller who does not own the goods sold will be in breach of
contract, as we saw in RowlandvDivall.
Common mistake as to possibility of performance
If the parties agree to make a contract which is, at that time, impossible to perform then the
contract will be void for mistake.
Common mistake as to quality
A common mistake as to the quality of goods sold will not generally make the contract
void.
Bell vLever Broswas applied by the Court of Appeal in the following case.
Bell vLever Bros (1932) (House of Lords)A company paid an employee £30,000 in return for him accepting redundancy. Afterwards,
it was discovered that the employee could have been dismissed without paying any
compensation because he had breached the company’s rules. Neither the employee
nor the company realised that the employee could have been dismissed without paying
compensation when the agreement was made.
HeldThe agreement was not void for mistake and the employee could keep the money.
A common mistake as to quality will make a contract void only if the mistake means that
what was being bought was essentially a different thing from what the parties believed it to
be. Both parties knew that what was being bought was the right to make the employee
redundant. They were mistaken as to how much this was worth, thinking it was worth
£30,000 when in fact it was worth nothing. However, they were not mistaken as to what
was being bought. Whether it was worth £30,000 or nothing, the thing which was being
bought was the same thing, the right to make the employee redundant.
Lord Atkin said: ‘A buys B’s horse; he thinks the horse is sound and he pays the price of a
sound horse; he would certainly not have bought the horse if he had known, as the fact is,
that the horse is unsound. If B has made no representation as to soundness and has not
contracted that the horse is sound, A is bound and cannot recover back the price. A buys
a picture from B; both A and B believe it to be the work of an old master, and a high price
is paid. It turns out to be a modern copy. A has no remedy in the absence of a representa-
tion or warranty.’