Business Law Essay

1521 Words Mar 31st, 2010 7 Pages
A mistake is a false assumption made by one or both parties in the formation of a contract and may be used as grounds to invalidate the agreement. There are three types of mistake in the law of contract. These are common mistake, mutual mistake and unilateral mistake. A common mistake is where both parties hold the same mistaken beliefs of the facts. A common mistake ca only void a contract if the mistake of the subject matter was sufficiently fundamental to render its identity different from what was contracted, making the performance of the contract impossible. There are two situations of common mistake. These are the case of res extincta and the case of res sua. In the case of res extincta, there is a common mistake asto the …show more content…
Willis had been adjudicated bankrupt in Calcutta where he resided. The remainder of the estate was to go to Daniel Willis, the brother of Joseph, on the latter’s death, with eventual remainder to Henry Willis, the son of Daniel.Joseph Willis had the right to cut the timber on the estates during his life interest, and the representative in Cochrane in England threatened to cut and sell it for the benefit of Joseph’s creditors. Daniel and Henry wished to preserve the timber and so they agreed with Cochrane through his representatives to pay the value of the timber to Cochrane if he would refrain from cutting it. News then reached England that when the above agreement was made Joseph was dead, and, therefore, it is now owned by Daniel. It was held that Daniel was making a contract to preserve something which was already his and the court found, applying the doctrine of res sua, that the agreement was void for a common mistake. In the case Of res extincta and res sua, equity treats them the same way as common law as it relates to the agreement being void. A mutual mistake is where both parties of a contract are mistaken as to the terms. Each believes they are contracting for something different. The court usually tries to

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