SEM 2, LECT 8 - Mistake - Contract 11/02/2020 Mistake - This area of contract law is concerned with situations where a contract may be regarded as never having come into existence or the contract is brought to an end as a result of a mistake by either or both parties. - The rules here are onerous and impose heavy burdens on a party arguing mistake. - However, contract law principles support the enforcement of the true intentions of contractual parties. - Therefore, a balance has to be struck. Categories of Mistake - Common Mistake (failure of a basic contractual assumption)- Mistake is as to a common assumption of fact - Mutual Mistake (communication mistake) - Mistakes negativing agreement (i.e. parties appear to be in agreement but are not). - Unilateral Mistake (mistake known to one party)- (i.e. one party takes advantage of the other's mistake). Common Mistake - Examples - Parties are in agreement, but the contract is impossible to perform. - Parties are in agreement and the contract could be performed but performance would be "radically different" from what was agreed. o E.g subject matter never existed or no longer exists (Res extincta) o Galloway v Galloway (1914) 30 TLR 531 o Sec 6 Sale of Goods Act 1979 o Couturier v Hastie (1856) 5 HLC 673 o McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 McRae hired by Commonwealth to salvage ship from a location that didn't even exist. Commonwealth made the mistake of putting forward a location which didn't exist. o Griffith v Brymer (1903) 19 TLR 434 Contract was frustrated, so became void. Mistake as to "Quality" - Bell v Lever Bros (1932) AC 161 o Limited scope for mistakes as to quality. - Leaf v International Galleries (1950) 2 KB 86 o Mistake as to the artist who painted a picture did not render the contract void (obiter). " Meeting of the minds, both parties thought the same thing. - The Great Peace (2002) EWCA Civ 1407
o Mistake as to distance of ship from salvage site did not render the contract void. Bell v Lever Bros - Lord Atkin: - 'In such a case, a mistake will not affect assent unless it is a mistake of both parties and is as to the existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be'. The Great Peace - Restatement of the requirements for common mistake o There must be a common assumption as to the existence of a state of affairs. o No warranty by either party that the state of affairs exists. Non-existence of the state of affairs must not be attributable to the fault of either party. o Non-existence must render performance of the contract impossible (or radically different from what was agreed). o The state of affairs may be the existence, or a vital attribute, of the consideration to be provided or the circumstances which must subsist if