Mistake in Contract Law Quiz

Study Notes

Mistake in Contract Law

Bilateral Mistake (Mutual Mistake): Involves a mistake on both parties' part. This can be further categorized into mistakes about the subject matter itself (1 subject matter mutual mistake) or mistakes about 2 separate subject matters (2 subject matters mutual mistake).
Mutual Mistake (1 Subject Matter): An error by both parties as to the subject matter's existence or identity. Cases like Raffles v Wichelhaus highlight this problem, where a common mistake regarding the identity of goods led to a voidable contract. The outcome depends on what was mistakenly believed..
Mutual Mistake (2 Subject Matters): Both parties held a mistaken belief about distinct aspects of the transaction. Similar to the 1 subject matter examples, outcome depends on the specifics of the mistake.
Unilateral Mistake: An error by only one party, a mistake of fact that has limited legal impact.
Common Mistake (1 Subject Matter): A mistake concerning a single subject matter shared by both parties. The subject exists or is presumed to exist, however the parties are mistaken about a critical feature or aspect of it. Examples include mistaken ownership (Res Sua), or the existence of the subject matter at the time of agreement (Res Extincta). Galloway v Galloway illustrates this concerning matters related to the existence of a living spouse who is perceived to be legally dead.
Mistake as to the Subject Matter's Existence: As highlighted in the Couturier v Hastie case, a contract becomes void if the subject matter ceased to exist before the contract was formed. In other words, the commodity in question did not exist when the contract was signed. One particular area that falls under this category has to do with the presumed existence of a commodity. The case of McRae v Commonwealth Disposals Commission differs in that the subject matter was presumed to be present.
Mistake as to the Subject Matter Quality: Contracts might be void if one party holds a mistaken understanding about the subject matter's quality or condition. Key cases in this area include Bell v Lever Bros and Leaf v International Galleries.
Mistake in Associated Japanese Bank v Credit Du Nord: A significant mistake concerning the true value of the subject matter can have a major impact on the ability to void a contract.
S.6 of the Sale of Goods Act 1979: Void contract if the subject matter has ceased to exist before contract creation without the knowledge of the seller. Subject matter exists but is now perished / destroyed.