GROUP STUDY ASSIGNED CASES: MISTAKE.
NAHUM AGYEPONG.
CASE 1: Amalgamated Investment & Property Ltd. V. John Walker.
Facts
The defendant, John Walker & Sons Ltd, advertised their warehouse for sale, either for
occupation or redevelopment of the property. It had been previously used for making whiskey.
The complainants, Amalgamated Investment & Property Co Ltd, bought this warehouse for
£1,710,000. In the process of the sale, the complainants had asked the defendants whether the
warehouse was registered as an architectural or historic interest building. The defendants had
told them that it was not. However, it became a listed building on 22 August 1973 and the
contract was signed on 25th September 1973. The defendant was informed that it had become a
listed building.
Issues
The complainants argued that the contract should be set aside over the common mistake of the
building being listed as historic. Alternatively, they argued for frustration of the contract. The
issue in this case was whether the contract could be set aside for common mistake or whether
there was frustration of the contract.
Decision/Outcome
The appeal from the complainant was dismissed. It was held that the building was listed on the
27th September 1973 and the contract had not been frustrated nor would it be set aside. The
Court of Appeal stated that the complainants had taken on the risk of the warehouse becoming or
being listed as an architectural or history building and this was demonstrated by their enquires
prior to the sale. In order for a contract to be set aside, there must be a common mistake made
during the formation of the contract and sale; this was not the case here.
CASE 2: Raffles v Wichelhaus
Facts
The parties agreed that the claimant would sell the defendant cotton. The agreement stipulated
that the cotton would arrive on the ship known as the ‘Peerless’. The identity of the ship was
important to this kind of agreement, because any contract would be terminated if that ship was
lost at sea. In fact, there were two ships called the Peerless. The defendant thought that they had
agreed on the first ship, which sailed in October. The claimant thought they had agreed on the
second ship, which sailed in December.
The claimant was not in a position to make the October shipping. They therefore delivered the
cotton by the Peerless sailing in December. The defendant rejected the shipment and refused to
pay.
GROUP STUDY ASSIGNED CASES: MISTAKE.
NAHUM AGYEPONG.
Issue(s)
Was there an agreement, and if so, which ship did it refer to?
Decision
The Court held for the defendant. It was impossible to objectively ascertain which ship was
meant. Since the identity of the ship was a key contract term, there had been no agreement. The
defendant was therefore not obliged to pay.
This Case is Authority for…
Where a key term of the contract is completely ambiguous, the contract will be void for mutual
mistake and lack of consensus ad idem (meeting of minds).
CASE 3: Scriven Bros & Co v Hindley & Co
Facts
The claimant instructed an auctioneer to sell their bales of hemp and tow. They described the
goods in the catalogue as including different lots of bales, with the same shipping marks. The
description did not mention any differences between the lots or explain which were tow and
which were hemp. However, the bales were on display just before the auction for purchasers to
examine.
The defendant wanted to buy hemp, so he examined the hemp bales. He did not intend to buy
tow, so he did not examine those bales. He accidentally bid on the tow and won. His bid was
extravagantly high for tow (but reasonable for hemp). The auctioneer thought that the defendant
had mistakenly overvalued the tow, but did not think he had bid on the wrong lot.
The claimant sought to claim the price from the defendant. The defendant claimed that the
contract was void for mistake.
Issue(s)
Was the contract void for the defendant’s mistake?
Decision
The High Court held that the contract was void. The parties never had a meeting of minds on the
subject matter of the contract. The claimant had contributed to this by ambiguously describing
the lots in the catalogue.
GROUP STUDY ASSIGNED CASES: MISTAKE.
NAHUM AGYEPONG.
The fact that the defendant was potentially negligent in examining the lots was not relevant.
They did not owe the claimant a duty to take reasonable care in examining the lots.
This Case is Authority for…
A contract can be void for mutual mistake where the subject matter of the contract is completely
ambiguous, and each party thinks it relates to something different.
CASE 4: Hartog v Colin & Shields
Facts
The defendants contracted with the claimants to sell 30,000 Argentine hare skins. By mistake,
they offered the skins at a particular price per pound rather than per piece. This made the goods
two-thirds cheaper than they should have been. In the parties previous negotiations, the parties
always discussed the price per piece. Expert testimony indicated that this was the norm for hare
skin sales. The claimant accepted the offer, and tried to enforce the contract.
Issue(s)
Did the parties have a binding contract?
Decision
The Court held in favour of the defendant. The claimant should reasonably have known that the
offer was a mistake. They were therefore not able to make a binding contract by accepting it.
This Case is Authority for…
A contract will only be void for unilateral mistake if the other party was aware of the mistake,
should reasonably have been aware of it.
A purchaser is not entitled to ‘snap up’ an offer which he knows (or ought to have known) was
made by mistake.
GROUP STUDY ASSIGNED CASES: MISTAKE.
NAHUM AGYEPONG.
CASE 5: Smith v. Hughes.
Facts
The claimant was offering oats for sale, and exhibited a sample of those oats. The defendant took
the sample. The next day, he wrote to the claimant offering to buy them for 34s. a quarter. The
defendant was under the mistaken belief that the oats were old, when in fact they were new oats.
The price offered made sense for old oats, but was quite high for new oats. When he realised his
mistake, the defendant refused to accept delivery. The claimant sued for breach of contract.
At trial, the jury held in favour of the defendant on the grounds that the defendant was labouring
under a mistake and the claimant knew it. The claimant appealed.
Issue(s)
Was the parties’ contract void for mistake or voidable for misrepresentation?
Decision
The court ordered a new trial. The mere fact that the claimant knew that the defendant was
mistaken was not sufficient grounds to void a contract.
However, if it appear to reasonable people from the circumstances and the parties’ behaviour that
the parties were contracting for old oats, there would be a contract for the sale of old oats. If this
were the case, the defendant would be entitled to reject the new oats. If not, the defendant would
be in breach of contract.
The judge’s direction to the jury was therefore incorrect and the matter should be reconsidered.
This Case is Authority for…
A seller’s passive acquiescence in a buyer’s mistake is not enough for a contract to be void for
mistake. Sellers are not under any legal obligation to inform buyers that they are mistaken.
What the parties intend to contract for is assessed objectively. As Blackburn J put it:
‘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.’
Other
Cockburn CJ noted that the contract would plainly be voidable if the claimant had positively
represented that the oats were old.
GROUP STUDY ASSIGNED CASES: MISTAKE.
NAHUM AGYEPONG.
CASE 6: Frederick E Rose (London) Ltd v William H Pim Junior & Co Ltd
Facts
The claimants received a third-party order for ‘Moroccan horsebeans described in Egypt as
feveroles’. A feverole is a specific type of horsebean. The claimant’s agent did not know what a
feverole was, so they asked one of the defendant’s agents. The defendant’s agent responded that
they were normal horsebeans and that the defendant could supply them. On this basis, the
claimant contracted to purchase ‘horsebeans’ from the defendant. In fact, the beans supplied
were not feveroles.
The claimant sought damages for breach of contract. To achieve this, they applied to the court to
rectify the contract to add the word ‘feveroles’ after the word ‘horsebeans’. They argued that
there had been a mutual mistake, such that the written contract did not reflect the parties’ true
intentions.
Issue(s)
Was the claimant entitled to rectification?
Decision
The Court held in favour of the defendant. Though the parties were subjectively mistaken as to
the nature of ‘feveroles’ and ‘horsebeans’, their objective conduct indicated only an intention to
contract for ‘horsebeans’. As such, the claimant was not entitled to rectification.
This Case is Authority for…
Rectification is only available where there is clear proof that the written agreement does not
correspond to the contract the parties entered into. It cannot make a new contract. The courts
must examine their objective evidence – the subjective beliefs of the parties are not relevant.
Other
A buyer who accepts goods, knowing that they do not conform to the contract, loses their right to
rescind the contract.