16. Mistake

Abstract

This chapter examines the effects of a mistake on the validity of a contract. A mistake may prevent parties from reaching agreement. First, a court may decide that no contract has been concluded where one party knows that the other is labouring under a mistake in relation to the terms of the agreement and fails to inform that other party of the mistake. Secondly, it may conclude that the terms of the offer and acceptance suffer from a latent ambiguity such that the parties cannot be said to have reached agreement. The third case in which a mistake may prevent the formation of a contract is where there has been a mistake as to the identity of the party who is said to be a party to the contract. The discussion then turns to the leading cases on common mistake, mistake in equity, and rectification. The chapter concludes by considering the non est factum defence, which can be invoked by someone who, through no fault of his own, has no understanding of the document that he has signed.