The doctrine of mistake

Question	Answer
What is mistake?	The doctrine of mistake states that where one or both parties within a contract make a fundamental mistake as to an element of the contract, the contract will be declared void. The doctrine has a very narrow application - any detraction from a narrow application will allow parties to remove themselves easily from what they believe to be a bad bargain.
GRIFFITH V BRYMER	The mistake must precede the contract being concluded and the contract will only be void for mistake if the mistake INDUCED the parties to enter into the contract.
MCRAE V COMMONWEALTH DISPOSALS COMMISSION	If risk is allocated or assumed by either parties, the doctrine of mistake will not be available.
KLEINWORTH BENSON LIMITED V LINCOLN CITY COUNCIL	Mistakes can be made as to fact and law.
The three types of mistake	There are three different types of mistake; common mistake, mutual mistake and unilateral mistake.
Common mistake	Common mistake is where both parties within a contract make the same fundamental mistake.
Common mistake - mistake as to the existence of a subject matter	A common mistake can be made as to the existence of the subject matter of the contract.
GALLOWAY V GALLOWAY	The two parties made a mistake as to the existence of the subject matter - they both believed that they were married when, in fact, they were not.
COURTIER V HASTIE	The courts have stated that common sense dictates that if the subject matter of contract never existed, the contract itself will cease to exist.
Common mistake - mistake as to the possibility of performance.	A common mistake can also be made as to the possibility of the contract being performed.
COOPER V PHIBBS	In this case, it was legally impossible for the contract to be carried out.
SHEIKH BROTHERS V OCHSRIER	There was a physical impossibility of the contract being performed - the land the party had brought could not sow and reap the amount of seeds that they expected.
GRIFFITH V BRYMER	The contract could not be carried out due to a commerical impossibility.
Common mistake - mistake as to the quality of the subject matter	A common mistake can be made as to the quality subject of the subject matter.
ASSOCIATED JAPANESE BANK V CREDIT DU NORD	In order for a mistake to be as to the quality of the subject matter, it must be established that mistake rendered the subject matter 'essentially or radically' different from what the two parties believed existed.
BELL V LEVER BROTHERS	Confirmed the case of Associated Japanese Bank v Credit du Nord.
LEAF V INTERNATIONAL GALLERIES	In this case, the mistake as to the quality subject of the painting did not render the item 'radically or essentially' different. Therefore, the doctrine of mistake did not apply.
NICHOLSON V SMITH-MARRIOTT	The claimant was entitled to damages through the mistake as to the quality of the subject matter.
GREAT PEACE SHIPPING V TSAVILIS SALVAGE	This is the modern case on common mistake. It established key elements to establish whether whether a contract will be void for mistake: 1. both parties make the same assumption 2. there is no allocation of risk 3. neither party is at fault for the mistake 4. performance of the contract is impossible 5. mistake is of fundamental as to the existence of the contract
Mutual mistake	Mutual mistake is where both parties make a different mistake. This is objectively assessed and therefore, is based upon the reasonable man and whether he would have understood, by looking at the conversation between parties, that the contract had two meanings.
RAFFLES V WICHELHAUS	The two parties made a different mistake as to which ship their shipment of cotton was being carried on. This was a fundamental mistake that made the contract void.
Unilateral mistake	Unilateral mistake is where only one party makes a mistake. The other party knows of this mistake and takes advantage of it.
Unilateral mistake - mistake as to terms of the contract	A mutual mistake can be made as to the terms of the contract
HARTOG V COLIN AND SHIELDS	The claimant mistakenly offered a large quantity of hare skins for price per pound instead of price per piece. The other party knew of this mistake and took advantage of it - knowing that he would receive the goods at a cheaper price due to this mistake.
SMITH V HUGHES	If the mistake is merely as to the quality of the subject matter, rather than about a term, it will not render the contract void for mistake.
Unilateral mistake - mistake as to the identity of the other party	A mistake can also be made as to the identity of the other party in contracts in which the identity of the other party is of importance to the contract.
CAR AND UNIVERSAL FINANCE V CALDWELL	The mistake as to the identity of the party has to be a fundamental mistake.
PHILLIPS V BROOKS	Where parties deal face to face, the law presumes that they intend to deal with the person in front of them, not the person that they claim to be.
LEWIS V AVERY	Confirmed the case of Phillips v Brooks.
INGRAM V LITTLE	This case stated that a contract could be deemed as being void where the person deals face to face with someone who lies about their identity - this has now been OVERRULED.
CUNDY V LINDSAY	In arm's lengths transactions, where a party assumes the identity of an actual person, the contract can be make void on the basis of mistake.
KINGS NORTON METAL COMPANY V EDRIDGE, MERRETT AND COMPANY	Where a party assumes the name of a non-existent party, the contract will still be valid.
SHOGUN FINANCE LIMITED V HUDSON	Confirmed that what was held in the case of Kings Norton remains goods law.
Rectification	As the doctrine of mistake has a very narrow application, rectification means that any part of a document that does not truly reflect the intentions of the parties can be rectified.
CHARTBROOK V PERSIMMON HOMES	Parts of a document that do not reflect the true intentions of the parties can be rectified.
Non est factum	Non est factum is a defence for a party that has signed a document and would normally be bound by the terms even if they had not read the documents.
L'ESTRANGE V GRAUCOB	Example of how parties would not normally be able to avoid a contract if they had not read the document itself before signing.
SAUNDERS V ANGLIA BUILDING SOCIETY	To rely upon the defence, it must be established that the signature was induced by a trick of fraud, the party was not careless in signing the document and that they made a fundamental mistake as to the nature of the document.

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The doctrine of mistake

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	Created by Chantal Briancon over 8 years ago