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Mistake 127

vColin & Shields (1939), for example, sellers of a large quantity of animal skins made a slip
of the pen and offered to sell them at one third of their usual price. The buyer accepted,
knowing that a mistake had been made. The contract was void for mistake because the
buyer knew that the sellers had made a mistake about the terms of their offer. However, if
one party knows that the other is making a fundamental mistake about the quality of what
is being sold then the contract will not be void for mistake. For example, in SmithvHughes
(1871)a seller of oats showed a potential buyer a sample of the oats. The buyer thought that
the oats were old oats and so he bought them. In fact, they were new oats which were no
use to him at all. It was held that even if the seller knew of the buyer’s mistake the contract
was not void for mistake. This situation differs from the examples given by Lord Atkin in
BellvLever Brosbecause in those examples both parties were mistaken as to the quality of
what was being sold.

Mistake as to the identity of the other contracting party

This is the most important type of unilateral mistake and needs to be considered in a little
more detail. Most of the cases concern a rogue who buys goods while pretending to be
someone else and who pays for the goods with a bad cheque. We have already seen that a
rogue who pays with a bad cheque commits a fraudulent misrepresentation which makes
the contract capable of being rescinded, which is also known as making the contract void-
able. So if the person who sells to the rogue avoids the contract before the rogue sells the
goods to a third party there will be no need to argue mistake. It is when the person who sells
to the rogue does not avoid in time that it becomes necessary to argue that the contract is
void for mistake. If this argument is successful the person who sells to the rogue will always
get the goods back because a void contract is no contract at all. No ownership of the goods
ever passes to the rogue under a void contract, or to anyone else to whom the rogue sells
the goods.
The following figure shows the different effect of good, void and voidable contracts. It
assumes that A sells goods to B and that B sells the goods on to C, who buys them in good
faith. The figure examines the different positions if the contract between A and B was a
good contract, a void contract or a voidable contract.

Sells goods

Figure 4.5The effect of resale after good, void and voidable contracts