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Topic 12- Remedies for Mistake (Non Est Factum (In order to promote…
Topic 12- Remedies for Mistake
Non Est Factum
In order to promote certainty- general view=
a person is bound by a contract that he has signed whether he has read the agreement or not
Some limited circumstances where it can be proved 'THE MIND OF TEH SIGNER DID NOT ACCOMPANY THE SIGNATURE'
The contract could be declared void for mistake
Doctrine will only apply where person can show that he or she has acted with due care re determining document's contents and character
Tedcastle McCormack v McCrystal
Morris P stated one must show
There was a radical or fundamentla difference between what was signed and what it thought was being signed
That the mistake was as to the general character of the document as opposed to its legal effect; and
There was a lack of negligence
The person concerned took all reasonable precautions in the circumstances to find out what the document was
Test not satisfied in
ADM Londis v Gibson and Gibson
Facts: P siught judgements against Ds for sum of 171,000 on basis of a guarantee document signed by the Ds
Issue: D argued unaware the signed document bu them created personal guaranee and instead claimed they thought they were merely opening an account w the P
Pleaded doctrine of non est factum
Held: Claim dismissed
The fact the document was a guarantee should have been plain enough to any reasonable person who read it
In particular the document was headed 'guarantee' and made repeated reference to 'guarantee' throughout
AIB v Higgins
Facts: Mr Mansfiled claimed he was entitled to escape liability for debt on basis he had reading age of 7 year oldand lacked any understanding of docs he had signed
Held; Seasoned businessman, could fly a helicopter, one stage controlled cast financail empire
Held: He did not take steps to find out what doc related to nor did he tell back of problems
Not a case of non est factum as he did not take all reasonable precautions to find out what he document he was signing was
Friends First Finance:
Facts: P claimed D borrowed approx 1,75m
D's signature appeared on loan facility agreement produced by P
P bank admitted it had never met with the D in order to agree loan facility nor did she ever attend offices of the P
P informed by her husband a family trust was being set up in favour of her and her children
Remembers signing these docs for this purpose
Held: Accepted plea of non est factum
D's H managed the business and financial afairs
She had no reason to doubt the trust document was not in fact a family trust but instead a convolute trust arrangement which facilitated a loan by P bank to D's husband
Doctrine open to abse and its application will be strictly limited
ERROR MADE MUST BE A FUNDAMENTAL ONE
Saunders v Anglia Building Society
Facts: P was an elderly widow who signed document believing it allowed her to transfer her house to her nephew
: did not read doc, but wished to raise funds for her nephew who was starting a business
Issue: Document actually dealt with the sale of the house to a third party from whom her nephew was seeking to raise money
Held: she could not plead non est factum
She intended to sign an agreement that assigned her interest in the property and that is exactly what occured
Mistake as to what she was signing was not sufficiently radical for doctrine to apply
Purpose of doctrine not to provide a safety net for a P who was careless and made a mistake
Allied irish Bank v Yates:
Held: A person raising the defence of Non est factum must prove there was a
*fundamental difference between what he signed and what he thought he was signing and that such mistake related to the general character of the document and there was no negligence on the party of the person signing the document
Held: D being a well educated lady and actively involved in conducting affirs of co understood teh implicaiton of signing the guarantee and thus, doctrine of non est factum could be invoked
Rectification
Remedy available in circumstances where an oral agreement has been concluded and the oral agreement then put in writing but recorded inaccurately
Equitable remedy which allows parties to 'rectify' the written mistake
Nolan v Graves and Hamilton
P agreed to buy property for £5,500 but auctioneer wrongly recorded the price as 4,550
P attempted to enforce sale of written price
Held: Ordered written document be amended to reflect true position
Doctrine of rectification will be accepted only in most limited situations
Enright: Rectification applies to cases of mistake in the document, not to cases of mistake in teh contract
Lucy v Laurel Construction
Held: A mistake which is not communicated to the other party will not be operative and the mistake will not be rectified
Facts: Builders drew up plan for property to sale and mistakenly depicted it as comprising more land than in fact was their intention
Held: Document could not be rectified as the site plan was an objective manifestation of builder's intention and Mr Lucy has done nothing irregular or dishonest
Laid down circumstances in which 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 see a mistake in a written agreement, and aware that the other party has not seen it, signs it knowing it contains a mistake
Joscelyne v Nissen:
An outwardly expressed 'continuing common intention' to contract on particular terms was sufficient
Irish Life Assuranc v Dublin Land Securities:
Facts: P co wished to sell a portfolio of lands in Palmersown
Wished to exclude certain lands there that were due to be compulsorily purchased
Mistakenly included these lands
Held: Rectification refused
the courts will not rectify a contract made in writing in the absence of convincing proof that the contract, as a result of the mistake, has failed to give effect to the common inention of the parties, previously manifested in ourward accord
Recission
A mistake which is common to both parties and which relates to a fundamental matter of fact (e.g. the continued existence of the goods) will prevent hat contract from coming into being
Price paid will be returnable
Must be mistake re fundamental term and not as to the effect of the contract
e.g. Hartog v Colin and Shields
Cooper v Phibbs
Demonstrates that mistakes that are operative at common law are treated differently to those that are operative in equity
Webster v Cecil
Court rectified the contract with the option to rescind instead
The remedy of recission not available where parties cannot be returned to their pre-contract position
Specific Performance
Mistake does not automatically give rise to remedy of specific performance
Where there is a misrepresentation or ambiguity the courts will decline this remedy as in
Tamplin v James
If P has not acted equitably this relief will also be refused
Or if its application would cause hardship
Damages
Damages are not avaialble for mistake unless courts can also find that a warranty or fraudulent or negligent misrepresentation was mad
Harlingdon v Hill Fine Art Ltd
: Painting turned out to be a forgery
A warranty and misrepresentation could not be found and the remedy of damages denied
Gill v McDowell
Irish courts showed willingness to award damages where the seller failed to correct a mistaken belief of the seller
Involved hermaphrodie animal sold at a fair
From some angles it looked like a heifer and from others a bullock
Purchaser believed to be either male or female and this was the unilateral mistake of the buyer and also he implied warranty of the vendor
Skyes v Taylor Rose
:
D failed to disclose house sold to P was the scene of a gruesome murder
when Ps sold house on they were not required to disclose this fact to the new buyer but chose to regardless
They sought from the Ds, who had sold to them the difference between teh price could have sold it for without this history and the price they in fact sold it for
Held; Court denied them damages
Case based on Fraudulent intent and not misrepresentation
Solle v Butcher
: Lord Denning stated that Cundy case would now be decided differently and that it would be concluded this contract was voidable and not void
This preferable solution- court could adjust the rights of the parties under the degree
Cundy seems to say that fraudulent transmission of documents betwen innocent parties will still allow a contract to be formed
Later rejected by Citibank v Borwn Shipley
Void v Voidable
Shogun- Void: no contract as trader did not intend to deal with the rogue
Minorities: Cundy and Ingram should be overruled
Contract void on nemo dat rule
Majority critical of Lord Denning's approach in Lewis
Seems to be leaning towards such contract being void where person is physcially prsent and this is hard on BF purchaser
Lewis: Lord Denning says contract is voidable only (and not void) where the person is physically present
Desire to protect the bona fide purchaser for value without notice has seen this approach followed in other courts worldwide