Contract - Mistake

Front 1

Mistake of Fact, not law.

Back 1

Generally, if the mistake is to be considered an operative mistake, it must be one of fact and not law. Essentially, ignorance of the law is no excuse. O'Loghlen v 'Callaghan (1874) IR 8 CL 116,

In England, the distinction between mistakes of fact and mistakes of law was abolished in Kleimrorth Benson v Lincoln City Council [ 1998] 3 WLR 1095.

Front 2

O'Loghlen v O'Callaghan (1874) IR

Back 2

The parties to a lease both mistakenly thought that the legislation required the rent for the property to be paid at a certain level when in fact it was payable at a lower level.


Notwithstanding that both parties made this mistake, it was deemed one of law and therefore could not grant the tenant relief

Front 3

Cooper v Phibbs (1865) 17 IR Ch R 73

Back 3

X agreed to let a fishery to Y. Both parties assumed X owned the fishery. In fact, Y had been made a tenant for life under a private law. Y was entitled to rescind the contract in equity.

Front 4

Categories of Mistake

Back 4

Common Mistake

the parties make or share the same mistake, e.g. X, while on holiday, agrees to sell his cow to Y. At the time the contract was agreed neither party was aware that X's cow bad already died of loneliness while X was away. The contract would be void on the basis that both parties were mistaken as to the existence of its subject-matter, i.e. both thought
the cow was still alive when entering into the contract.

Mutual Mistake

this is where the parties are at cross-purposes. Under this category it could be argued that no agreement had ever come into being. Both parties make different mistakes. X thinks he is selling his Ford Fiesta to Y, who thinks he has agreed to sell him his Ferrari.

Unilateral Mistake

this is similar to mutual mistake in that there is no meeting of minds as between the parties. Here X makes a mistake and Y knows, or should know, that he has made the mistake, e.g. X thinks he is buying Steven Gerrard's Champions' League Final winning jersey from Y, when in fact it is a cheap imitation. If Y knows, or should have known, of this mistake, it amounts to a unilateral mistake and the contract may be deemed void.

Front 5

Common Mistake

Back 5

In these circumstances the parties have reached an agreement. While the parties may have made a mistake, it is the same mistake. What kind of common mistake will render a contract unenforceable may differ under the common law than under equity. There are two main types of operative common mistake:

(a) mistake as to the existence of the subject-matter and

(b) mistake as to the fundamental underlying assumption of the contract.

The doctrine of common mistake will only apply in circumstances where the parties have failed either expressly or impliedly, to allocate the risk of the mistake in the contract, i.e. X enter; into a contract with Y and states "I guarantee this is a painting by Picasso". It
transpires that the painting is a cheap imitation. X cannot plead mistake even though both X and y genuinely believed the painting was a Picasso because X gave a guarantee in the contract itself that it was by Picasso.

Front 6

Couturier v Hastie ( 1852) 8 Exch 40

Back 6

A contract for the sale of a cargo of corn that both parties believed was en route to the UK, but which had in fact already been destroyed, was deemed void on the basis of common mistake as to the
existence of the subject-matter.

Front 7

Strickland v Turner (1852) 7 Exch 208

Back 7

An annuity sold upon the life of an individual who - unbeknownst to either party- was already dead, was deemed to be void for common mistake.

Front 8

Pritchard v Merchants' and Tradesmen's Mutual Life Assurance Society (1838) 3 CBNS 622

Back 8

The reactivation of a life assurance policy where the subject of the policy -unbeknownst to either party -was already dead was also deemed void.

Front 9

Galloway -v- Galloway (1914)

*****

Back 9

In a separation agreement entered into by a couple who mistakenly believed that they had been properly married was deemed void for common mistake when they discovered that the marriage was a nullity.

Front 10

Section 7 of the Sale of Goods Act 1893

Back 10

Mistakes as to the existence of goods for sale under a contract renders the contract void.

Front 11

McRae v Commonwealth Disposals Commission (1950) 84 CLR 377.

Back 11

The defendant sold the salvage rights to a wrecked oil tanker. The tanker was said to be in a particular location on a particular reef. The plaintiff bought these rights and arranged a salvage expedition, only to discover that the ship
did not exist. One would have thought that this contract should be deemed void for common mistake, however the court did not view it this way. It found that in making the representation to the plaintiff, the defendant had impliedly guaranteed the existence of the wrecked ship. In so doing, the court laid great emphasis on where the fault for the mistake lay:

The Commission cannot in this case rely on any mistake as avoiding the contract, because any mistake was induced by the serious fault of their own servants, who asserted the existence of a tanker recklessly and without any reasonable ground.

Front 12

Mistake as to the Fundamental Underlying Assumption of the Contract

Back 12

If the parties share a mistake that is considered fundamental to the contract, then that contract may be deemed unenforceable on the grounds of common mistake.

Obviously, a fundamental mistake could be one that renders the contract impossible to perform, like the
life policy in Strickland v Turner (1852) 7 Exch 208, for example.

While the decision in The Great Peace has the advantage of adding certain~y .to the l~w on
common mistake as regards the kind of mistake that must be fundamental, 1t ts not wtthout
its critics. As Treitel observed in his textbook (p.286):
Equity's more liberal treatment of mistake to some extent sacrifices the require~ents of
certainty emphasised by the common law. One cannot in this field have certamty and
justice at the same time; and the present state of . .. [the] l~w pres~nts a .som~what
incongruous appearance, with common law striving for certamty whtle equtty tnes to
promote justice

The Irish courts in both O'Neill v Ryan [1991] ILRM 672 and most recently lntrum Justitia
BV v Legal and 'Trade Financial Services Ltd [2005] IEHC, have continued to adopt the Bell and Solie approach to the issue. Indeed, Delaney in her textbook on equity (p.601) has argued
that there are strong reasons not to follow The Great Peace line of authority:
There are good grounds for arguing that this equitable basis for intervention should be
allowed to continue as it allows for the setting aside of a contract where the justice of the
case requires it and also permits this to take place on terms which appear just to the court.

Front 13

Bell v Lever Bros [1932] AC 16

*****

Back 13

Bell was employed by Lever Bros as a chairman of one of its subsidiaries. In order to terminate his employment with the company, a "golden handshake" was agreed whereby B was paid a significant sum of money.

Unbeknownst to either party, B's contract of employment could have been terminated without the "golden handshake" agreement. Lever Bros sought to have the agreement deemed void on the grounds of common mistake because the agreement was radically different from what they thought they were receiving.

The House of Lords rejected the claim that the contract should be declared void for common mistake. The mistake was not sufficiently fundamental.

Certainly, Lever Bros entered into a bad bargain (in that they could have dispensed with B's services for free), but the arrangement entered into with B rewarded him for his past work with the company. At its most basic, they entered into a compensation package and received a compensation package. It may be that they paid "over the odds" for that package because of a mistake, but that was not considered sufficiently fundamental to render the contract void under the common law.

Lord Atkin noted:

Mistake as to quality of the thing contracted for raises more difficult questions. In a case a mistake will not affect assent unless it is the 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.

Front 14

Leaf v International Galleries [1950] 2 KB 86

Back 14

Both parties mistakenly believed that a painting was by the famous artist, Constable. It actually was not. There was no operative mistake - the mistake, which was one of quality, did not go to the root of the contract, i.e. the party contracted for a painting and received a painting.

Front 15

Western Potato Co-Op v Duman [1985] ILRM 5

Back 15

The parties entered into a contract for the sale of potato seeds. The parties believed that seeds were fertile. Both were mistaken. The mistake in this case was one of quality, which went to the root of the contract and as a consequence rendered the contract void.

Front 16

Associated Japanese Bank v Credit du Nord [1988]

Back 16

Two banks were the victims of an elaborate scam. The plaintiff bank had advanced the fraudster with funds to finance his engineering machines. The defendant bank had guaranteed the fraudster's debt. Both banks believed that machines were in existence, but they were not. When the plaintiff bank sought to rely on the guarantee with the defendant bank, it was alleged that the contract was void for mistake. The court upheld the defendant's claim.

Front 17

Fitzsimons v O'Hanlon [1999] 2
ILRM 551

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Back 17

In that case, a settlement over the estate of a deceased person was agreed on the basis that the plaintiffs would be paid in the region of £60k with the remainder (approximately £150k) being distributed amongst the defendants.

The deceased had been less than forthcoming with his assets during his lifetime and efforts had been made to trace all of his assets upon his death. Following the settlement, a further deposit in the region of £60k was found.

The court found that the original settlement could not be declared void for common mistake.

As a matter of policy, it was held that the courts should enforce contracts save for exceptional circumstances. The mistake made in this case was not sufficiently fundamental to render the contract void.

Front 18

Solle v Butcher [1950] 1 KB 671

*****

Back 18

Following refurbishment of the premises, both the landlord and the tenant believed that the work on the flat meant it was of such quality that it was no longer the subject of rent control legislation. This view was mistaken. The tenant was in possession of the flat for two years while paying rent far in excess of what he should have been paying.

The Court of Appeal held that the common mistake was not sufficiently fundamental to render the contract void, i.e. the tenant contracted for a flat and that is exactly what he got.

Equity intervened in this case and found that the mistake - while not sufficiently fundamental under the common law - could be rendered voidable.

The court therefore had the discretion as to whether to set the contract aside. The tenant was given a choice: either surrender the lease entirely or remain in possession at the full rent that would have been allowed under the legislation.

Front 19

Great Peace Shipping Ltd
v Tsavliris Salvage (International) Ltd [2002] 3 WLR 1617

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Back 19

Here, a ship suffered damage
while sailing in the Indian Ocean and another ship, The Great Peace, .was asked by the company (Tsavliris) to deviate from its course in order to aid the stncken ship, until Tsavliris could organise the salvage of the ship.

Tsavliris had entered into am agreement with The Great
Peace on the mistaken understanding that it was the closest ship to the stncken vessel: It transpired that The Great Peace was not some 35 miles away,. but. was in. fact at least 410 miles away from the damaged vessel.

When Tsavliris discovered. this mistake, it did not immediately seek to end the contract with The Great Peace. Instead, it first checked to see whether there were any other ships in the vicinity of the stricken ship.

Once it discovered that there was, it attempted to rescind the contract with The Great Peace as a common mistake, on the basis that the location of the The Great Peace was different from what the parttes had thought.

The Court of Appeal held that the mistake, while material, was not. sufficiently fundamental. The defendant did receive what he contracted for, i.e. a charter ship.

While its quality may have been questionable, essentially he did get what he had contracted for. One indication that the mistake as to the location of The Great Peace was not crucial was the evidence that upon discovering the true location of The Great Peace, the defendant did not seek to cancel the arrangement immediately.

In general terms, the Court of Appeal - in an attempt to rid the law of its incoherence in this area - found that there is no jurisdication to grant recission of a contract on the ground of common mistake where the contract is valid and enforceable on ordinary principles of the common law.


The decision in The Great Peace case was approved by the English Court of Appeal in Brennan v Bolton Burden [2005] QB 3.

Front 20

Mutual Mistake

Back 20

Mutual mistake and unilateral mistake share similar characteristics in that when such a mistake occurs, the parties have never objectively reached an agreement ad idem. With mutual mistake, the parties have made different mistakes and, subjectively at least, there has been no agreement. With unilateral mistake, one party has made a mistake and the other party is
aware (or should be aware) of that mistake- again, there is no meeting of minds.

In mutual mistake, the parties are at cross-purposes and it could therefore be said that no
contract ever came into existence. Does mutual mistake always mean that no contract came into existence?

The courts adopt an objective test for determining the circumstances where notwithstanding the existence of the mutual mistake, a contract is still said to have come into existence.

Thus the test is not what was actually in the minds of the parties themselves, but
whether the reasonable man would conclude, based on his observations, that an agreement had into existence and under what terms.

If the reasonable man, having observed the interactions between the parties, would conclude that no agreement could have come into existence, then the so-called contract is void for mutual mistake.

Front 21

Smith v Hughes (1871) LR 6 59

Back 21

Blackburn J.:

whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting htmself would be equally bound as if he had intended to agree to the other
party's terms.

Front 22

Wood -v- Scarth (1858)

Back 22

The defendant intended to let his pub for an annual premium pIus the payment of £500 at the outset.

When making the offer to the plaintiff, the defendants clerk never disclosed the payment of £500.

Notwithstanding the mutual mistake as regards the true cost of the pub, the court found that an agreement had come into existence on the basis that a reasonable man would believe from these facts that a contract had been agreed without the payment of the £500.

Front 23

Clayton Love v B & I Steampacket (1970) 104 ILTR 157

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Back 23

A dispute arose over the transportation of frozen fish and it was found that a reasonable man would have concluded that when the offer was made, it was on the basis that the fish would be transported at atmospheric pressure rather than room pressure.

Front 24

Raffles v Wichelhaus (1864) 2 H & C 906,

Back 24

X agreed to buy a cargo of cotton from Y, which was to arrive on The Peerless sailing
from Bombay. Unfortunately, there were two ships named The Peerless sailing from Bombay with a cargo of cotton. One was sailing in October and the other in December.

This was a classic case of the parties being at cross-purposes and it was impossible for the reasonable
man to ascertam what the true nature of the contract was.

Front 25

Mespil v Capaldi [1986] ILRM 373

*******

Back 25

The parties entered into a contract regarding the settlement of litigation. The contract was said to be a "full and final settlement of all disputes between the parties."

One of the parties took that to mean it related to all outstanding matters between the parties (including those not before the court). The other side took it to mean that the agreement related only to
those matters that were currently pending litigation.

The Supreme Court held that the agreement was void on the grounds of mutual mistake. It was impossible in the circumstances to decide what agreement had come into existence. In the words of O'Hanlon J.:

If the offer made is accepted by the other person in a fundamentally different sense from that in which it was tendered by the offeror, and the circumstances are objectively such as to justify such an acceptance, there cannot be said to be the meeting of minds which is essential for an enforceable contract. In such circumstances, the alleged contract is a nullity.

Front 26

Unilateral Mistake

Back 26

This arises where one party to the contract makes a mistake and the other party is aware (or should be aware) of this mistake. If the other party is not, nor should have been, aware of the mistake, then a valid contract would come into existence. A party will be said to have been aware of the mistake where a reasonable person would have reached the same conclusion.

Front 27

Webster v Cecil (1861) 30 Beav 62

Back 27

The defendant had refused to sell his land to the plaintiff for £2,000. The plaintiff then received a letter from the defendant stating that he would sell him the land for £1,250. The plaintiff accepted immediately. It was only then that the defendant realised his mistake - the offer should have read £2,000 instead of £1,250--and he notified the plaintiff of his mistake.

The court held that the contract was void for unilateral mistake, of which the plaintiff should have been aware.

Front 28

Hartog v Colin and Shields [1939] 3 AllER 566

Back 28

An agreement was entered into whereby hare skins were to be sold to the buyer at a price per pound. It was a well-established custom within that industry that such hare skins were to be sold by piece rather than by pound (the difference being that the value of a piece was approximately one-third of that of a pound).

The court found that the buyer was taken to have known of the mistake of the seller and the contract was therefore void for unilateral mistake.

Front 29

Chwee Kin Keong v Digilandmall Com Pte Ltd [2005] 1 SLR 502

******

Back 29

The defendant mistakenly advertised its printers on the internet at $66 rather than $3,854. The plaintiff placed an order for over 1,000 of these printers. The order was placed during the early hours of the morning in Singapore, where the defendant was based.

Once the mistake was realised, the defendant sought to repudiate the contract. It was held that the contract was void for unilateral mistake - the plaintiff was aware that some mistake had been made as regards the pricing and had just sought to take advantage of the situation.

Front 30

Mistaken Identity

Back 30

What occurs where one party deals with another person (a fraudster) believing that person to be someone else entirely? In other words, if a fraudster tricks a person into dealing
with him by pretending to be somebody else, what are the consequences? Logically, one
would think that as the other party has made a mistake as to the true identity of the
fraudster, that is a mistake of which the innocent party is not aware and the fraudster has full knowledge of the mistake. Thus the contract between the fraudster and other party is,
surely, void for unilateral mistake?

Such a conclusion leads to another difficulty. If the original contract is void for unilateral
mistake, then what becomes of the innocent third party (also known as "equity's darling"),
who purchases the goods from the fraudster? If the original contract was a nullity, then the
fraudster never received good title and therefore the innocent third party could never get good title and the original seller would be entitled to the return of the goods. On the other hand, if equity intervenes and treats the original contract as voidable, then the innocent third party could obtain good title.

How does one distinguish the three cases? Cheshire, Fifoot and Furmston (p.316) opine that on the facts of Philips and Lewis, neither seller made any great effort to verify the identity of the person before them. In other words, the creditworthiness of the person did not seem to be hugely significant for them. However, to the plaintiffs in Ingram, the identity (and therefore the creditworthiness) appeared to be of much greater concern. It may also be simply the fact
that the courts are involved in a "loss distribution" exercise by distributing the loss in accordance with who is really to blame and who could afford it.

Front 31

Cundy v Lindsay (1878) 3 App. Cas.459

Back 31

A fraudster called 'Blenkarn', from 37 Wood Street, wrote to
the plaintiffs offering to buy goods. Aware that a respectable firm called "Blenkiron & Co" traded from 123 Wood Street, he signed his letter in such a manner that it appeared to be "Blenkiron".

The plaintiffs thought they were dealing with the respectable firm and despatched the goods to the fraudster's address. The fraudster sold them to the defendants, who had purchased the goods in good faith. The plaintiffs sought the recovery of the goods
from the defendants.

It was held that if one examined the circumstances objectively, the plaintiffs had always intended to deal with Blenkiron and not Blenkarn, of whose existence they were not even aware. The contract was declared void.

Front 32

Phillips v Brooks Ltd[1919] 2 KB 243

Back 32

A fraudster entered a jeweller's shop and purchased a ring. He signed a cheque stating, "You see who I am, I am Sir George
Bullough" and gave his address. The jeweller, delighted with the sale to such a prominent person, checked the address in the directory and found that it was correct.

The fraudster sold the ring on to the defendant, who had no notice of the fraud. Did the defendant get good title?

The court found that the jeweller intended selling the jewellery to the man standing in front of him (a man whom he believed was Sir George Bullough). The mistake as to his identity only rendered the contract voidable until disaffirmed.

To have succeeded in establishing that the contract was void for unilateral mistake, the jeweller needed to prove that he wanted to deal with Sir George Bullough and nobody else.

Front 33

Ingram v Little [1961] I QB 31

Back 33

A fraudster went to the residence of the plaintiffs and made an offer to purchase their car. When he proposed to pay for the car by cheque, the plaintiffs refused to follow through with the sale. At this point he told the plaintiffs that he was a "P G M Hutchinson", a prominent businessman, and gave his address. The plaintiffs confirmed these details in the telephone directory. Happier, the plaintiffs sold the car to the fraudster, who in turn The court found that the contract was void for unilateral mistake.

Why was this so? The facts of Ingram and Philips are virtually indistinguishable, and yet the courts reached very different conclusions. It has been submitted by Cheshire, Fifoot and
Furmston (p.315) that in Ingram the identity of the purchaser was of fundamental importance
to the plaintiffs. This was evidenced by the fact that the plaintiffs in that case went to great lengths to show that they only wanted to deal with P G M Hutchinson- they first refused to
complete the transaction and then went to examine the directory. The facts of the case showed that they were very much concerned with the identity of the fraudster. The fact that the plaintiffs in Ingram were focusing on an attribute possessed by P G M Hutchinson, namely his creditworthiness, indicated the importance to them of the identity of the party with whom they were contracting.

Front 34

Lewis v Avery [1972] l QB 198

Back 34

A fraudster posed as a famous actor and met with the plaintiff and offered to buy his car. The fraudster offered a cheque to the plaintiff. Fearing that the cheque could bounce, the plaintiff at first refused to allow the other party to remove
the car.

To satisfy the plaintiff, the fraudster produced a pass from Pinewood Studios. The plaintiff accepted the cheque and allowed the car to be taken away.

It transpired that the cheque had been stolen. The fraudster sold the car on to the defendant.

The Court of Appeal followed Philips and rejected Ingram.

Front 35

Shogun Finance Ltd v Hudson [2004]

Back 35

A man purchased a car from a dealership under a hire-purchase agreement. He completed the hire-purchase forms at the dealership and
said that his name was Mr Patel, and produced a driver's licence in the name of Mr Patel. The forms were then faxed to the hire-purchase company. The company did a credit check, but did not investigate his identity. The man later sold the car to the defendant.

While this case was not similar to the Philips/Ingram/Lewis line of cases in that the hire-purchase company and the original purchaser of the car were not in each other's physical presence, the majority of the House did approve of the Philips and Lewis line of authority on such cases. This case was actually more closely related to Cundy v Lindsay and it was held that there was no contract in
place the only person who could have entered into a contract with hire-purchase company was Mr Patel.

Front 36

Non Est Factum

Back 36

In order to promote certainty, the general view is that a person is bound by a contract that he has signed, whether he has read the agreement or not. In some limited circumstances, however, where it can be proven that "the mind of the signer did not accompany the signature", the contract could be declared void for mistake.

The doctrine is obviously open to abuse and its application will be strictly limited. Thus the
error made must be a fundamental one.

Front 37

Bank of Ireland v McManamy [1916] 2 IR 161

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Back 37

A co-op manager insisted that members of a farmer's co-op sign documents which they believed were order forms for manure. They were actually bank guarantees.

The documents were deemed void - the signed documents were entirely different in effect from what the parties understood them to be.

Front 38

Saunders v Anglia Building Society [1971] AC 1004

Back 38

The plaintiff was an elderly widow who signed a document believing that it allowed her to transfer her house to her nephew. She did not read the document, but wished to raise funds for her nephew, who was starting a business. The document actually dealt with the sale of the house to a third party from whom her nephew was seeking to raise money. Could the widow avoid the agreement by pleading non est factum?

The House of Lords held that she could not. She intended to sign an agreement that assigned her interest in the property and that is exactly what occurred. Thus the mistake as to what she was signing was not sufficiently radical for the doctrine to apply.

The House of Lords reiterated that the purpose of the doctrine was not to provide a "safety net" for a plaintiff who was careless and made a mistake, or who made a mistake as to the legal effect of the document.

Front 39

Rectification

Back 39

This remedy is available in circumstances where an oral agreement has been concluded and the oral agreement is then put in writing, but recorded inaccurately. Rectification is an equitable remedy that will allow the parties to "rectify" the written mistake.

The doctrine of rectification will be accepted only in the most limited of situations. As Enright in her textbook has stated: "Rectification applies to cases of mistake in the document, not to cases of mistake in the contract."

The case of Lucy v Laurel Construction, Unreported, High Court, December 18, 1970 set out the circumstances under which the Court will Order rectification:

(a) where there is a shared or common mistake made by the two parties in the drafting of a written instrument which was to give effect to a prior oral agreement; and

(b) when one party sees a mistake in a written agreement and, aware that the other party has not seen it, signs it knowing it contains a mistake.

Front 40

Nolan v Graves and Hamilton [1946] IR 376

Back 40

The plaintiff agreed to buy property for £5,550, but the auctioneer wrongly recorded the price as £4,550. The plaintiff attempted to enforce the sale at the written price- £4,550.

The court rejected this and ordered that the written document be amended to reflect the true position.

Front 41

Swainland Builders Ltd v Freehold Properties Ltd [2002] EWCA 560

Back 41

The remedy of rectification is available only for the putting right of a mistake in the
terms of a document which purports to record a previous transaction.

It is not an appropriate remedy where the mistake relates to the transaction itself rather than the document which purports to record it.

Front 42

Lucy v Laurel Construction, Unreported, High Court, December 18, 1970

****

Back 42

The court held that a mistake which is not communicated to the other party will not be
operative and the mistake will not be rectified. The builders drew up a plan for the property to sale and mistakenly depicted it as comprising more land than in fact was their intention.

The court held that the document could not be rectified as the site plan was an objective manifestation of the builders intention and Mr Lucy has done nothing irregular or dishonest.

This case also laid down the circumstances in which a court would have jurisdiction to order
rectification:

(a) where there is a shared or common mistake made by the two parties in the drafting of a written instrument which was to give effect to a prior oral agreement; and
(b) when one party sees a mistake in a written agreement and, aware that the other party has not seen it, signs it knowing it contains a mistake.

The decision in Lucy also confirmed that there must be a concluded oral contract.

Front 43

Irish Life Assurance Co. Ltd. V
Dublin Land Securities Ltd [1989] IR 253

***

Back 43

The plaintiff company wished to sell a portfolio of lands in Palmerstown. However, they wished to exclude certain lands there that were due to be compulsorily purchased.

The portfolio mistakenly included these lands (the agent for the purchaser was told certain lands were going to be excluded however this was not held to be notice in these circumstances).

Rectification was refused on the grounds that the courts will
not rectify a contract made in writing in the absence of convincing proof that the contract, a result of the mistake, has failed to give effect to the common mtentwn of the parties, previously manifested in outward accord.

Front 44

Recission

Back 44

A mistake which is common to both parties and which relates to a fundamental matter of fact (e.g., the continued existence of goods as in Courtier v Hastie) will prevent tha contract from coming into being and the price paid will be returnable.

It must be a mistake m relatwn to a fundamental term and not as to the effect of the contract.

This may be seen in the case of Hartog v Colin and Shields. The case of Cooper v Phibbs demonstrates that mistakes that are operative at common law are treated differently to those that are operative in equity. In Webster v Cecil the court rectified the contract with the option to rescind mstead. The remedy of recission is not available where the parties cannot be returned to their pre-contract position (Clarke v Dickson (1858) EB & E 148).

Front 45

Specific Performance

Back 45

Mistake does not automatically give rise to the remedy of specific performance. Where there is
a misrepresentation or ambiguity the courts will decline this remedy as in the case of Tamplin v James ( 1880) Ch.D. 215. If the plaintiff has not acted equitably this rehef will also be refused
or if its application would cause hardship (Patel v Ali; Denne v Light).

Front 46

Damages

Back 46

Damages are not available for mistake unless the court can also find that a warranty or fraudulent or negligent misrepresentation was made.

Front 47

Harlingdon Ltd. V Hull Fine Art Ltd. [1990] 1 All ER 737

Back 47

A painting turned out to be a forgery - however, a warranty and misrepresentation could not be found and the remedy of damages was denied.

Front 48

Gill v McDowell [1903] 2 IR 43

Back 48

The Irish courts showed a willingness to award damages where the seller failed to correct a mistaken belief of the seller. The case mvolved a hermaphrodite animal sold at a fair.

From some angles it looked like a heifer and from others a bullock. The purchaser believed it was either a male or a female and this was the unilateral mistake of the buyer and also the implied warranty of the vendor.

Fraudulent intent and not misrepresentation was the basis of the decision.

This case is described by Clark as a rogue decision.

Front 49

Sykes v Taylor Rose [2004] EWCA Civ. 299

*****

Back 49

The defendants failed to disclose that the house sold to the plaintiffs was the scene of a gruesome murder.

When the plaintiffs sold the house on they were not required to disclose this fact to the new buyer but chose to regardless. They sought from the defendants, who had sold to them the difference between the price they could have sold it for without this history and the price they in fact sold it for.

The court denied them damages. Lord Denning stated in Solie v Butcher that the Cundy case would now be
decided differently and that it would be concluded that this contract was voidable and not
void.

This solution would be preferable as the court could adjust the rights of the parties
under the decree. Cundy seemed to say that fraudulent transmission of documents between innocent parties will still allow a contract to be formed but this has later been rejected in the case of Citibank v Borwn Shipley & Co. Ltd. [1991] 2 AllER 690.