Law- Seminar 7- Mistake

Mistake in a contract is one of the circumstances in which a contract can be what?

Vitiated or avoided,

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What is the problem with defining a mistake?

The word 'mistake' bears a more restrictive meaning in law that it does in popular speech- And often happens in very specific situations,

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Can the law enforce a contract with a mistake?

The law will enforce a contract where the parties got what they contracted for even though it is clear one party contracted under a mistake,

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The harshness occasioned by common law led to what interverning to migrate this hardship?

Equity

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However, what has recently been settled based on equity?

it has not been settled equity has no jurisdiction to intervene where a contract is held to be void for mistake

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What are the three types of mistake?

-Common -Unilateral, -Mutual

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What is a common mistake?

Where both parties make the same mistake

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What is a unilateral mistake?

One party is mistake- Someone taking advantage of a mistake another party made for example

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What is a mutual mistake?

Parties are at cross purposes

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What two categories can these mistakes be grouped into?

Agreement mistakes, 2)Fundamental mistakes

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For common mistake/ mistakes going to the root of the contract, what two cases are used to show this?

-Bell v Lever Bros, -Associated Japanese bank v Credit du Nord,

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Describe the Bell v Lever Bros case.

Bell and Snelling as Chairman to run Niger- 5 year contract. Neger merged with another company, making them redundant. Lever Bros new contract with payments and agreed. However, Bell committed serious breaches of duty which would have lost him hisjob

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What did the court decide

This was only a mistake as to quality and didn't render the contract essentially different from that which it was believed to be- Action failed by Lever Bros for compensation,

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What rule did the court create from this case?

"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 essentialy different from the thing it is believed to be."

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Describe the Associated Japanese Bank v Credit du Nord case.

A con man entered into an agreement to sell some machinery and lease them back. Machines didn't exist. Defendant guaranteed con man's obligations under lease. Con man declared bankrupt, plaintiff sued the defendant under guarantee

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What did the courts decide?

The parties had contracted on the basis that the machines existed, and since the security of the guarantor was the machines, the fact they didn't exist was a fundamental mistake and so defendant entitled to avoid contract,

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Mistakes going to the root of the contract are classified into what three things?

1) Existence of subject matter, 2) Title, 3) Quality,

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What two cases are used to show mistakes going to the root of the contract?

-Griffith v Brymer, -Couturier v hastie,

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Describe the Griffith v Brymer case.

24th June 1902- Plaintiff entered into oral agreement for hire of a room to view the coronation procession on 26th June. Decision to oprate on the King made the procession impossible,

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What did the court decide?

Held the contract should be mae void- Mistake was common to both parties and went to the root of the matter- They hired the room for the coronation so could recover money

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Describe Couturier v Hastie.

Contract for sale of corn believed to be in transit. Unknown to both the corn had deteriorated before that date and been sold by captain of the ship. seller sued byter for contract price.

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What did the court decide?

it was held that art the time of sale, the corn didn't exist- there was a total failure of consideration and the buyer wasn't liable to pay contract price,

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In some cases, can the seller assume liability for the non-existence of the subject matter?

Yes on occassion courts will

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What case is used to prove this?

McRae v Commonwealth Disposals Commission

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Describe the case of mcRae v Commonwealth disposals commission

Defendant sold an oil tanker described as lying on Jourmand Reed. Plaintiffs spent lots on salvage expedition but there was no oil tanker, nor any place known as Jourmand Reef. Accused of breach of contract, deceit and negligence,

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What did the court decide?

McRae could claim damages for breach in contract. They rejected the contract was void as CDC promised it was there and took that rise- Both parties had equal knowledge

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What is the mistake as to title based on purchasing property?

Where a person enters into a contract to purchase property that already belongs to him and so the contract is void

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Give an example of a case?

Cooper v Phibbs

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Describe Cooper v Phibbs

Nephew leased fishery to Uncle. Uncle died. When lease came up for renewal, the nephew renewed lease from aunt, but uncle had given nephew life tenancy.

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What did the court decide?

Lease made voiable for mistake as nephew already had a beneficial ownership right in the fishery.

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For mistake as to the quality of the thing contracted for, what two cases are used to show this and not having the contract made void?

1) Smith v Hughes 2) Leaf v International Galleries

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Describe Smith v Hughes case

Defendant brought a cargo of new oats when he though he was buying old oats- he had opportunity to examine oats but didnt,

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What did the court decide?

Since he had the chance to examine the goods, his mistake was not sufficient to vitiate the contract,

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Describe the Leaf v International galleries case.

Purchase of painting. Both believe it was by Constable. 5 years late claimant discovered it wasn't. Action bought against for misrepresentation and mistake.

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What did the courts ecide?

Claim for mistake unsuccessful as mistake relating to the quaity and didn't render the subject matter as something essentially different from that which he believed it to be- He bought a painting and got it,

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However give an example of a case where the contract is made void?

Nicholson v Smith Marriot

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Describe Nicholson and Venn v SMith Marriot

Contract for a quantity of Georgian table linen wrongly described as the authentic property to Charles I

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What did the courts decide?

Courts held that claimant should have damages and would have been entitled to a breach in the contract,

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When is it the only time when a mistake which goes to the root of the contract will be sufficient to make the contract void?

Where parties contract under false and fundamental assumption

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What two cases are used to show this?

1) Scott v Coulson 2)Galloway v Galloway

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Describe the Scott v Coulson case.

A contract for the assignment of a life insurance policy was made on the erroneous belief the insured person was still alive.

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What did the courts decide>

Contract held to be void

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Describe the Galloway v Galloway case?

A seperation deed entered into by a man and his wife on the erroneous assumption that their marriage was valid

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What did the court deicde?

Held to be void for mistake

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For a unilateral mistake where 1 party takes the advantage, what case is used for this?

Hartog v Colin Shields

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Describe Hartog v Colin Shields

Defendant mistakenly offered a large quantity of hare skins at a certain price per pound whereas they are meant of offer per piece- Price was 1/3 what it should have been. Claimant accepted.

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What did the court decide?

Contract held void for mistake. hare skins generally sold per piece and given the price the claimant must have realise the mistake

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For mutual mistake/ agreement mistakes, what does agreement mistakes mean?

Where there is a mistake as to the terms of the offer and the terms of acceptance

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If the offer is accepted in a different sense to what it was intended, can a contract be held to be void? What two cases prove this?

Yes, -Raffles v Wichelhaus, 2) Scriven v Hindley

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Describe Raffles v Wichelhaus

COntract for sale of some cotton to be shipped by 'The Peerless' from Bombay. The Peerless was sailing in October and December. Defendant though it was the October sailing and claimant believed it was the December sailing,

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What did the court decide?

Applied an objective test and stated that a reasonable person wouldnt have been able to state with certainty which sailing had been agreed so contract void,

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Describe Scriven v Hindley

Defendants bid at auction for two lots, believing both to be hemp. but one was tow. D declined to pay for the tow and sellers sued for price. D's mistake arose from fact both contained ship mark 'SL' as usually hemp and tow never on same ship

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What did the court decide?

There was no contract, there was no ad idem (meeting of minds) and the mistake was due to the plaintiff,

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What are two other types of mistakes?

-Identity, -Documents

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For mistake as to the identity of the person, why does this pse a problem for courts?

AS courts have to determine who of the two innocent people defrauded after the rogue has disappeared should bear the loss

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What distinction must be made about how the contracts were made in identity mistakes?

Whether the contract was made over distance or face-to-face,

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What are the two cases which show distance contracts?

1)Cundy v Lindsay and 2) Kings Norton Metal co v Edridge merrett co

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Describe the Cundy v Lindsey case.

A rogue hired a room, the same street as a firm called Blenkiron and Son whom had similar name. Rogue ordered quantity of handkerchiefs from claimant disguising as Blenkiron but payment failed and then sold on to defendant.

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What did the courts decide?

The contract was held void fro unilateral mistake as the claimant was able to demonstrate an identifiable existing business with whom they intended to contract,

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Describe the Kings Norton Metal Co v Edridge Merrett co?

Rogue ordered goods from claimant using a printed letter claiming to be Hallum and co. In factno such company existed. Claimant sent out goods- Rogue sold goods and then disappeared without paying.

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What did the courts decide?

Contract not void for mistake as they couldn't identify an existing compnay called Hallum and Co with whom they intended to contract. Mistake wsa only as to the attributes of the company,

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What two cases show face to face contracts?

-Ingram v Little, -Lewis v Avery

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Describe the Ingram v Little case

Two Ingram sisters sold car to rogue calling himseld Mr Hutchinson. Agreed a price for cash but when Rogue offered cheque, deal off. Rogue gave full name and address- Hilda went to post office and checked. Agreement- Chequ bounced and car sold on,

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What did the courts decide?

Contract was void for mistake- Court of appeal held sisters only intended to deal with Mr Hutchinson at address given as they weren't willing to offer a sale of payment by cheque from anyone else. Howeve,r case criticised.

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Describe the Lewis v Avery case

Claimant sold mini cooper to rogue claiming to be Richard Greene (actor). Rogue showed a Pinewood Sutdio pass with his name and address. Claimant let him take car with log book for cheque but fake. Rogue sold car on. Claimant wants car back.

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Ehat did the court decide?

No void for mistake- Presumption that the parties intend to deal with the person in fron of them was not displaced.

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For rules with identity, where a person is induced by post by Rogue A, claiming to be B with whom he is willing to deal, is there a contract? What case is used to show this?

No contract and the goods can be recovered from an innocent purchaser e.g. Cundy v Lindsay

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If a person deals with rogue A, thinking it is B, when A and B are really the same person is there a contract? What case is used to show this?

There is a contract which is mrely voidable for fraud, and a good title is passed on to an innocent bystander e.g King Norton's Metal co v Edridge, Merrett

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if a person sells face to face, why is there a contract and an example of a case?

As they are presumed to be selling to the person in front of him e.g. Philips v Brooks

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What is the exception to this and the case?

Unless there is strong rebutting evidence such as Ingram v Little

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Describe Philips v Brooks case

Rogue claimed to be Sir Bullogh- Paid by cheque and persuaded to give ring now for wife. Gave address of Sir Georrge Bollogh- jeweller checked. Rogue pawned ring in name of Mr Firth.

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What did the court decide?

COntract not void for mistake. Where the parties transact face to face the law presumes they intend to deal with the person in front of them not the person they claim to be. Jewellers were unable to demonstrate that they would only have sold to Sir,

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For mistake in relation to a written document, what plea can people make when they sign a document which is essentially different to the one he intended to sign?

A plea of non est factum

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When is the plea not available?

A person who failed to exercise reasonable care or was lazy or neglected to read the document

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Give an example of a case where the plea isnt available?

Blay v Pollard and Morris

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Describe the Blay v Pollard and Morris case.

Defendant signed a document which he knew related to the dissolution of a partnership of which he was a member. Unknown to him, the document contained a term, which made him liable to indemnify other partners for partnership liabilties,

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What did the court decide?

Court held he was bound by his signature,

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Give an example of a case where the plea is available?

Foster v McKinnon

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Describe the Foster v mcKinnon case.

defendant elderly gentleman who was fraudulently induced to endorse a bill of exchange for £3000 on the assurance it was a guaranteed like one he had previously signed. Later the bill of exchange endorsed for value to Foster,

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What did the court decide?

It was held that the plea of no est factum was available to the defendant as he never intended to make such a contract and was not guilty of being negligent,

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For mistake in equity, what was previously the case before it was put to an end by the court of appeal in which case?

-Previously the case that equity and common law treated mistake differently, -Great Peace Shipping v Tsavliris Savage Ltd

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Law- Seminar 7- Mistake

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