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