Conclusion: a contract can be void because a no offer and acceptance or b an express or implied condition precedent to the contract is not satisfied. No room for independent doctrine of mistake. It must relate to the "existence, or a vital attribute, of the consideration to be provided or circumstances which must subsist if performance of the contractual adventure is to be possible" Great Peace Shipping :Existence of subject matter Mistakenly acquiring one's own property Essential quality of the thing contracted for Essential background assumption.
NB these are only illustrations of mistakes that can but not necessarily will void the contract for mistake. Couturier v Hastie 5 HLC Held: Goods that have perished at the time of contracting unknown to seller makes for a void contract for total failure of consideration and buyer is not obligated to pay the price, because on a proper construction of the contract it was for the sale of existing cargo and not for cargo whether existing or not.
The risk of mistake as to the existence of the corn was allocated to the seller. S6 Sale of Goods Act provides that a contract for the sale of specific goods is void if the goods, without knowledge of the seller, have perished at the time of formation.
However, this: o i only applies to goods that once existed and perished [? NB S12 Sale of Goods Act creates an implied term that the seller warrants their title to the property sold so is liable for breach if this is untrue.
There must be a mistake aobut the "existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be" Bell v Lever : the mistake must relate to the substance and not quality of the subject matter. Whenever it is to be "inferred from the terms of the contract or its surrounding circumstances that the consensus has been reached upon the basis of a particular factual assumption, and that assumption is not true, the contract is avoided" Bell v Lever.
Contrast more flexible:Rescission? Law Reform Frustrated Contracts Act Solle v Butcher [] 1 KB Facts: parties agreed for PS yearly rental when they were subject to a PS limit under the Rent Act unless a notice of increase was served, which was not done because of a common mistake as to the status of the property.
Held Denning LJ : granted the landlord rescission of the lease on the terms that he offered the tenant a new lease for PS Parties have since not been inclined to argue it and lower courts haven't resisted the rejection of the jurisdiction, so there is probably no future for the equitable doctrine anymore. Buy the full version of these notes or essay plans and more in our Contract Law Notes. Technical settings. Someone recently bought our students are currently browsing our notes.
Updates Available A more recent version of these Mistake And Frustration notes — written by Oxford students — is available here. Phillips MR: o Conditions for common mistake: -Common assumption as to existence of a state of affairs -No warranty by either party that the state of affairs exists -Non-existence of state of affairs not fault of either party -Non-existence of state of affairs must make performance impossible -State of affairs may be the existence or a vital attribute of i consideration or ii circumstances that must subsist if performance is to be possible Thus there is a four-step inquiry:Shared mistake: the mistake must be shared by both parties Construction: the risk of mistake was not allocated to either party Fault: the claimant was not at fault ex.
But sometimes it will be allocated to the seller: McRae v Commonwealth Disposals Commission 84 CLR HCA - Facts: C invited tenders for an oil tanker in the Jourmand Reef, D successfully tendered and embarked on an expensive expedition to salvage the tanker, but turned out that both the tanker and Jourmand Reef didn't exist. Held CoA : since the guarantee stipulated that the machines could only be substituted with the bank's consent, this was an express condition precedent that the guarantee was for existing machines alternatively, the Court would have implied such a condition from the facts NB Smith, "Contracts - Mistake, Frustration and Implied Terms", L.
It must relate to the "existence, or a vital attribute, of the consideration to be provided or circumstances which must subsist if performance of the contractual adventure is to be possible" Great Peace Shipping :Existence of subject matter Mistakenly acquiring one's own property Essential quality of the thing contracted for Essential background assumption NB these are only illustrations of mistakes that can but not necessarily will void the contract for mistake.
Solle v Butcher [] 1 KB Facts: parties agreed for PS yearly rental when they were subject to a PS limit under the Rent Act unless a notice of increase was served, which was not done because of a common mistake as to the status of the property.
More Contract Law Samples. Breach And Damages Notes. Certainty Pq Notes Notes. Consideration Notes. Consideration Pq Notes Notes. Consideration Promissory Estoppel Notes. Consideration Theory Notes. Content Exclusion Clauses Notes. Contract Notes. Damages Introduction To Remedies Notes. It explains that mistakes determine whether a contract comes into existence at all or whether a written contract is to be interpreted in a manner that appears to run contrary to its text.
It also discusses the distinction of mistakes between mistakes as to the terms of the contract or the identity of the contracting parties and mistakes as to the factual and legal assumptions that underlie the contract. This chapter elaborates that mistakes as to terms or identity may give rise to a wide range of legal consequences, depending on the nature of the mistake.
It clarifies that a mistake as to the facts or law that underlie an agreement can only affect an apparent contract in a very narrow set of circumstances. Keywords: erroneous belief , contract , mistakes , identity , legal consequences , agreement. Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.
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All Rights Reserved. OSO version 0. In Krell the cancellation of the parade is a subsequent unexpected event that makes the contract lose its point. In Griffith there is no such subsequent event; the parade was canceled before the contract was signed. The contract is made based on a mistaken assumption that the parade is still planned, an assumption the parties make because they are ignorant of an event that has already happened.
The idea is that party assumes the risk if the party knows that he or she is acting on limited knowledge, on information that might be crucially incomplete or inaccurate.
The requirement is usually put this way: you can't get out on mistake if you were consciously ignorant. If we looked at the overall pattern of how courts apply these criteria--mistake involving a basic assumption--we would see that they apply the criteria in a way that fairly assigns the risk of loss from the mistake.
Think about the coronation cases. The renter certainly knew--or should have known--that there was some chance that the parade would be canceled; after all, King Edward had been sick for a while. So the renter is like the Commission; he did not investigate the possibility that the parade would be canceled; he just rented the room anyway.
So if we thought the renter should bear the loss arising from the mistake, we could say he acted in conscious ignorance. So why not say that? Probably because the renter was not in any better position than the landlord to investigate the chance that the parade would be canceled. So the judgment about whether there is conscious ignorance is in many cases a judgment about who ought to bear the risk. These cases are usually used to show how fuzzy the notion of a "basic assumption" is.
In Sherwood the court says that a barren cow is fundamentally different kind of animal than a fertile cow, so the mistake about fertility involved a basic assumption on which the contract was made. In Wood the courts says that a diamond is not fundamentally different a piece of topaz, so the mistake in thinking that the diamond was topaz does not involve a basic assumption on which the contract was made.
The difference between a diamond and a piece of topaz looks pretty basic--surely as basic as the difference between a barren cow and a fertile cow. So what is going on here? I suggest: the issue turns on who should bear the risk here. In these two cases, it is a "risk" of gain we are talking about.
What we want to know is who gets to keep the thing that has turned out to be more valuable than thought. How should we allocate the gain? One way is to ask who is in the better position to recognize that there might be a possible gain from the transaction.
The dissent makes this argument in Sherwood v. The dissent argues that the plaintiff did not buy the cow for beef but because the plaintiff thought the cow might be able to breed. He was speculating on the chance that the cow was fertile.
He turned out to be right, and perhaps saved a valuable cow from being slaughtered for beef. So why shouldn't he get to keep the cow? This could explain Wood v. Boyton too--who is in a better position to see if the stone is valuable? The seller or the buyer, a jeweler? The jeweler. What was the mistake here? The contractor discovered his mistake the next morning and tried to cancel, but the school dist.
The court held that the contractor could rescind the contract. Cases like this are common, cases in which someone submits a bid that turns out to be mistaken. And there are lots of cases that let the bidder out because of the mistake.
But why? We said earlier that you can't get out for a unilateral mistake; they mistake has to be mutual--both parties have to have the relevant mistaken belief.
But a mistake in the bid looks like a unilateral mistake. What is the mistaken belief of the person that accepts the bid? That person believes that the bidder made a bid of a certain amount, and this belief is true. It is the bidder that mistakenly believes that the amount of the bid accurately reflects the costs of the project.
But the courts let the bidder out anyway. You can get out of the contract for unilateral mistake, but not always. Sometimes the courts will not let you out.
The 2d R summarizes the situation here by saying that you can get out for unilateral mistake "as justice requires". Often, you are excused if you have not imposed large losses on the other side--if the losses are small, the court can order compensation under the doctrine of equitable apportionment. There has to be some limit on getting out of the contract for unilateral mistake.
If we contract for me to sell you my house, and then I change my mind and want out, I can't get out just because now I think it was a mistake on my part to sell. Even if I offer to pay all your reliance expenses, I can't get out.
If I could do this, a contract would hardly be binding. So what is the limit? I can get out "as justice requires. An example of what we don't require: you and I enter a contract; I breach; you sue for expectation damages.
I argue that I never thought I would be liable for that much. When I made the contract, I really intended, and sincerely thought I would be, liable only for 10 cents. This will not be a successful defense; I should have learned the rules before contracting. The fact that I actually intended to be liable for only 10 cents is irrelevant. What parties agree to is what a reasonable outsider would think they agreed to given what they said and did.
This is called the objective meeting of the minds; it is objective in the sense that it involves a "reasonable outsider" test. What I actually intend is thought of, by contrast, as "subjective".
So it is the objective appearance of consent that matters, not the actual subjective existence of consent. This theory does fit some of the cases--the joke cases, for example.
If the joke is so obvious that everyone knows it is a joke, then there is no contract. On the meeting of the minds theory, a reasonable outsider would not interpret the words and actions as the making of an agreement.
If the buyer does not know the seller is joking, then there is a contract. Because the reasonable outsider would interpret the seller as making an agreement. But there are problems. What about Raffles v. Would a reasonable outsider say that the parties had reached an agreement here? It looks like it. Given what the said and did, it is reasonable to think that they agreed that the cotton should be shipped on the Peerless. Of course, there is a problem about exactly what they agreed to, but it looks like there is an agreement.
So the meeting of the minds doctrine should hold that there is a contract here--even if an ambiguous one. But the court finds that there is no enforceable contract here. This sounds like the courts are ignoring the meeting of the minds doctrine in these cases. And I do think these cases are better analyzed in terms of the mistake analysis we have developed. Just before the boat is completed, the America's Cup is cancelled.
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