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    Contract Ii - Worksheet 1 - Mistake - 2023

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    vanessa wright
    Contract 11

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    Contract Ii - Worksheet 1 - Mistake - 2023

    Uploaded by

    vanessa wright
    3 views4 pages
    Contract 11

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    CONTRACT II - WORKSHEET 1 - MISTAKE - 2023

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    Contract 11

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    3 views4 pages

    Contract Ii - Worksheet 1 - Mistake - 2023

    Uploaded by

    vanessa wright
    Contract 11

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    UNIVERSITY OF THE WEST INDIES, MONA

    FACULTY OF LAW
    CONTRACT II – LAW 2110

    ACADEMIC YEAR 2019/2020

    WORKSHEET 1 – THE LAW OF MISTAKE

    Learning objectives: The student should be able to:

     classify and recognise the types of mistake


     explain the legal principles governing the law of mistake and suggest
    bases of distinctions for cases where relevant
     explain the legal effect of mistake
     apply the legal principles learned to hypothetical fact situations
     explain the theoretical underpinnings of the doctrine of mistake
     discuss reasons for the apparent restrictive application of the doctrine

    GENERAL NOTE

    When considering mistake, an appropriate starting point is to recall that a contract is:

    a. an agreement between or among parties;

    b. which his capable of being enforced according to its terms; and

    c. subject always to applicable law.

    The first essential requirement to be proved, where contract is concerned, is that there must be
    an agreement which reflects that there was “consensus ad idem”.

    With mistake, the critical questions to be considered are: Does that which is presented as
    mistake have the substantive effect of undermining consensus ad idem? If so, what is the effect
    to be? Are there different types of mistake? Does type determine what the effect should be?

    The relevant literature, including case law, reveals that there are three (3) types of mistake –
    common, mutual, and unilateral. Each type, including by reference to its effect when proved, will
    be considered in this module.

    COMMON MISTAKE – both parties make the same mistake which is so fundamental that it
    nullifies agreement. Classic examples of this are res extincta cases. [Care! Some judgments

    Contract II Worksheet 1 - Mistake 1


    have used the term mutual mistake to refer to situations which are essentially cases of common
    mistakes.]

    Couturier v Hastie (1856) 5 H L Cas 673

    Note that cases of res sua may be considered as being similar to res extincta cases: Cooper v
    Phibbs (1867) L R 2 HL 149.

    McRae v Commonwealth Disposals Commission (1951) 84 C L R 377

    Sheik Bros v Ochsner [1957] A C 136.

    Bell v Lever Bros Ltd [1932] A C 161

    Associated Japanese Bank (International) Ltd v Credit du Nord [1989] 1 W L R 255

    Think: Is Bell v Lever Bros reconcilable with Associated Japanese Bank?

    Great Peace Shipping v Tsavliris Salvage Ltd [2002] 4 All E R 689

    See esp Lord Phillip’s judgment in Great Peace in which he identifies five elements
    which must be present for a common mistake to be operative. Apply these to the facts
    of Associated Japanese Bank. What outcome did your application yield?

    Graves v Graves [2007] EWCA Civ 660

    Kyle Bay v Underwriters Subscribing [2007] EWCA Civ 57

    Triple Seven v Azman Air Services Ltd [2018] EWHC 1348 (Comm)

    Mistake in equity? The notion of an equitable doctrine of mistake took root in Solle v Butcher
    [1949] 2 All E R 1007. BUT the concept of mistake in equity is now dubious having regard to
    the judgment in Great Peace Shipping (supra) which has discredited the doctrine. Is there a
    separate and distinct test which gives rise to an equitable jurisdiction to rescind contracts which
    are not void at law?

    Read: M Pawlowski, ‘Common mistake: law vs equity’ 152 N L J 132.

    MUTUAL MISTAKE – both parties are at cross-purposes – thinking different things. Thus
    consent is negatived and, technically, no contract comes into existence.

    Raffles v Wichelhaus (The Peerless) 159 E R 375

    Scriven Bros v Hindley [1913] 3 K B 564

    Cf: Smith v Hughes (1871) L R 6 Q B 597

    Contract II Worksheet 1 - Mistake 2


    UNILATERAL MISTAKE – one party is mistaken and usually the other party is aware of this.

    a) Identity cases
    Many cases involving unilateral mistake have arisen in respect of personal identity.
    Many of them also raise the issue of misrepresentation. Note, however, that the legal
    effect of mistake is different from the legal effect of misrepresentation.

    Cundy v Lindsay (1878) 3 App Cas 459

    King’s Norton Metal Co v Edridge, Merrett & Co (1897) 14 T L R 98

    Phillips v Brooks [1919] 2 K B 243

    Ingram v Little [1960] 3 All E R 332

    Lewis v Averay [1972] 1 Q B 198

    Shogun Finance Ltd v Hudson [2004] 1 A C 919

    b) Documents mistakenly signed – The general principle is that a person is bound to


    the terms of a contract he has signed. However, pleas of non est factum (this is not
    my deed) are likely to succeed if it is shown that the document signed was
    fundamentally different from what the signatory believed it to be, provided he was not
    careless about signing it.

    Saunders v Anglia Building Society (Gallie v Lee) [1971] A C 1004

    Lloyds Bank plc v Waterhouse [1990] Fam Law 23

    [For a concise statement on the law of mistake, see the Jamaican case, Clacken v Causwell
    Supreme Court no. 2008 HCV 01834, delivered 12 Nov 2010, paras. 151-157 (available on
    ourVLE)]

    Note court’s reluctance to vitiate contracts on the basis of other types of unilateral mistake:
    Statoil v Louis Dreyfus Energy Services [2008] EWHC 2257 (Comm).

    MISTAKES OF LAW.

    Up until 1999, mistakes of law could not have the effect of invalidating a contract. But see:

    Kleinwort Benson v Lincoln County Council [1999] 2 A C 349 which abolished the rule and held
    that monies paid under a mistake of law were recoverable.

    Is there an attempt to limit the scope of the Kleinwort Benson v LCC principle? See:

    Brennan v Bolt Burdon [2004] EWCA Civ 1017

    Contract II Worksheet 1 - Mistake 3


    NB. LEGAL EFFECT OF MISTAKE: Where mistake operates, it makes a contract void. Cf
    cases involving misrepresentation (Worksheet 2).

    Reading: Stone, Modern Law of Contract (12th ed) Ch 9, pp 309-338

    Kodilinye, Commonwealth Caribbean Contract Law, Ch 8

    Cheshire, Fifoot & Furmston, Law of Contract (17th ed) Ch 8 pp 295-340

    Smith & Thomas, A Casebook on Contract (12th ed) Ch 23 pp 669-699

    SOME QUESTIONS FROM PAST EXAMS

    1. Jeff enters into a contract with Eddy to sell Eddy his, Jeff's, 1945 Ford ZX car for
    $100,000 and his broodmare (a horse he keeps for breeding), Anna, for $80,000.
    Unknown to both Jeff and Eddy, Lesley, Jeff's daughter, writes off the car two days
    before the contract was made.

    Also, three weeks prior to the contract between Jeff and Eddy, Anna, the broodmare, falls
    and becomes barren. Anna is now worth only $10,000. Neither Jeff nor Eddy, who is
    purchasing Anna for breeding purposes, knows of this at the time of the contract.

    Advise Eddy.

    2. There are few situations in which the doctrine of mistake has any practical role to play.
    Discuss

    3.

    Contract II Worksheet 1 - Mistake 4

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