13. Non-agreement mistake

Abstract

Course-focused and comprehensive, the Textbook on series provides an accessible overview of the key areas on the law curriculum. This chapter focuses on the legal treatment of mistakes that are presumed to nullify consent if both parties entered into the contract under the same fundamental mistake, assuming the absence of a provision of the contract allocating the risk of this initial impossibility. The doctrine of common mistake in English law is designed to protect the interests of third parties and to ensure certainty in transactions. A fundamental common mistake arises in cases where there is true impossibility or failure of consideration. Under these circumstances, the contract is automatically void and any money or property involved has to be returned. Fine distinctions can arise in terms of the legal treatment of impossibility depending upon whether the impossibility is initial (common mistake) or subsequent (frustration doctrine). Categories of common mistake at common law include mistake as to subject matter (res extincta) and mistake as to ownership (res sua). A mistake as to quality will very rarely be sufficiently fundamental to render the contract void since impossibility of the contractual adventure is required. This chapter also discusses Lord Denning’s attempts to introduce an equitable jurisdiction to set aside on terms in cases of mistakes as to quality which were rejected in Great Peace Shipping Ltd v Tsavliris (International) Ltd and the fact that this means there is no remedial flexibility in such instances.