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Mistake (Overview (Three types of mistake (Common - both parties make the…

- - - - Hartog v Colin & Shields (1939)
  - - - Bound by signature - L'Estrange v Graucob (1934)
      - Exception
        
        Non est factum - not my deed
        
        Due to incapacity - Thoroughgood's Case (1584) - illiterate woman induced to execute deed
        
        Due to fraud - Foster v MacKinnon (1869) - senile man induced to sign bill of exchange in belief that guarantee
        
        No negligence - Saunders v Anglia Building Society (1971)
        
        Lloyds Bank v Waterhouse (1990) - illiterate man signed guarantee in reliance on bank's negligent misrepresentations as to its nature - did not know that he couldn't read - could still rely on non est factum
  - - - Problem if only voidable for misrepresentation - s23 Sale of Goods Act 1979 - equity's darling
        
        “When the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller’s defect in title”
        
        Lewis v Avery (1972) - as only void for misrep and plaintiff had failed to void contract in time, third party who bought the car had good title
        
        Solution - show there was an operative unilateral mistake
        
        However... "generations of law students have struggled with this problem. They may be forgiven for thinking that it is contrived by their tutors to test their mettle...” - per Lord Millett in Shogun Finance v Hudson (2003)
        
        Test
        
        Party alleging unilateral mistake must show mistake was as to IDENTITY, not to ATTRIBUTES
        
        Face to face dealing - presumption that seller intended to deal with person in front of them
        
        Phillips v Brooks (1919) -
        
        c.f. Ingram v Little (1961)
        
        Distance selling - presumption that the seller intended to deal with the person the rogue held themselves out to be
        
        Cundy v Lindsay (1978) -
        
        c.f. King's Norton Metal v Edridge Merrett & Co (1897)
        
        Present position - Shogun Finance v Hudson - confirmed distinction
- - - - Courturier v Hastie (1856) - sale of cargo of corn in transit - captain had been forced to sell the cargo as it had fermented in the hold - outcome depended on whether buyer had agreed to buy specific goods or a piece of the adventure - decided former, since no such thing in existence at time of contract
      - McRae v Commonwealth Disposals Commission (1951) - where circumstances are such that seller deemed to have warranted the existence of the goods, probably liable to buyer for breach of contract if not in existence - here found to have assumed risk by giving clear instructions as to where subject-matter (ship) was to be found
        
        Essential factor is to construe the contract to assess which of the parties, if any, agreed to accept the risk of non-existence - concept explained in Associated Japanese Bank v Credit du Nord (1989), per Steyn J
        
        ‘One must first determine whether the contract itself, by express or implied condition precedent or otherwise, provides who bears the risk of the relevant mistake. It is at this hurdle that many pleas of mistake will either fail or prove to have been unnecessary. Only if the contract is silent on the point is there scope for invoking mistake. It is only in these rare circumstances, where neither party has accepted the risk, that the contract can truly be declared void’.
      - Sale of Goods Act 1979, s6 - "where there is a contract for sale for specific goods, and the goods without the knowledge of the seller have perished at the time when the contract was made, the contract is void"
    - - Cooper v Phibbs (1967)
  - - - Even if affects utility or value - Harrison & Jones v Bunten & Lancaster (1953); Scott v Littledale (1858)
      - Unless...
        
        The mistake is so fundamental as to destroy the nature of the agreement
        
        Bell v Lever Bros (1932) - "...as to a quality essentially different from the thing it was to be..." - agreed that would resign with compensation, then found out had previously engaged in private trading contrary to the terms of the contract service - had they known could have treated contract as repudiated - he had been under the impression that doing this would not be enough to entitle Lever Bros to have contract set aside - found agreement to terminate broken contract not substantially different from agreement to terminate unbroken
        
        Common mistake must "relate to something which both must necessarily have accepted in their minds as an essential element to the subject matter" - so mistake as to quality will rarely render contract void
        
        Difficulty of succeeding on this claim confirmed in Great Peace Shipping Ltd v Tsavliris (International) Ltd (2002)
        
        Three cases with obiter statements on mistake as to quality
        
        Nicholson & Venn v Smith Marriott (1947) - if both parties believed they were selling and buying Carolean table linen and did not possess that quality, would be sufficiently fundamental - turned out be Georgian, not belonging to Charles I
        
        Leaf v International Galleries (1950) - contracted to buy picture of Salisbury Cathedral and this was what he got - fact that no painted by Constable as both had thought did not go to subject matter but merely affected value
        
        Suggested by Treitel that was fundamental
        
        Associated Japanese Bank v Credit du Nord (1995) - agreed on Bell test
- - - - Smith v Hughes (1871) - ‘if, 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 himself would be equally bound as if he had intended to agree to the other party’s terms"
    - - Raffles v Wichelhaus (1864) - "...where an objective appraisal of the facts reveals no agreement has been reached as to the terms of the contract" - two different ships called the same thing leaving Bombay at same time - could be void
        
        Statoil ASA v Louis Dreyfus Energy Services LP (The Harriette N) (2008) - more recent application of this principle