Mistake,
Illegality/public policy,
Unconscionability
Mistake
• Mistake refers to an error in judgment or an
incorrect view about something
• Refers to the situation where one or both
parties make a mistake of fact such that there
is no real consent to the contract
• Mistake often renders the contract void
3 Types
• Common
• Mutual
• unilateral
Common Mistake
• A situation where both parties make the same
mistake about the same thing. E.g. where they
both assume that the subject matter exists but
which in fact does not.
• Must relate to a material fact and be sufficiently
fundamental to render the contract void.
• E.g. A agrees to buy a house from B, unknown to
both, the house has been demolished.
• This renders the contract void
• Where only the quality of the subject matter is
affected, the contract is not void.
• Leaf v. International Galleries: Leaf bought a
painting mistakenly believing it was made by a
well known painter. Held: contract was not
void because the mistake affects only the
quality and not the fundamental nature of the
subject matter.
Mutual Mistake
• Parties are at cross heads over a key matter in
the contract such that there is no true
agreement.
• If the facts suggest that the intention was
different, then the contract is void.
• E.g. A agrees to sell his house at Addokope to
B. B accepts believing the house is at
Kumakope.
Unilateral Mistake
• One party knows that the other is mistaken. If the
mistake is to a fundamental issue then the
contract is void.
• Ingram v. Little: A person pretending to be Mr. H
bought a car from 2 sisters and issued a cheque in
payment. The sisters phoned the address he gave
and were told there was no such person at the
address. He turned out to be a fraudster. Held:
sisters intended to deal with Mr. H at that address
and not the fraudster. The contract is therefore
void.
Illegality/public policy
• Contract is illegal if its creation, purpose or
means is contrary to law.
• Addy v. Irani: “where a contract which a
plaintiff seeks to enforce is expressly
proscribed, prohibited or forbidden by statute,
no court will lend its assistance to give it
effect”
Examples
• Contracts to commit crimes
• To promote sexual immorality
• Contracts prejudicial to administration of justice
e.g., influencing a judge, giving false evidence
• Contract to corrupt public life. Ampofo v. Fiorini:
A, a senior civil servant in the forestry division
contracted to use his position to assist F in return
for 35% of profits made by F. held: contract was
contrary to public policy, illegal and therefore
void ab initio.
• Contract to evade the payment of taxes
• Contract is contrary to public policy if its
enforcement would produce unsatisfactory
results in society
• Enforcement of any contract contrary to law will
be against public policy
• Generally contracts in restraint of trade are
against public policy, e.g.
– a contract that restricts a person’s freedom to carry
on his trade or profession
– Contracts to stifle business competition
– Contracts to promote discrimination, racism
• However the courts will enforce employee
restraint contracts that are intended to
protect trade secrets and business
connections, and customers
Unconscionability
• A transaction that is oppressive, grossly unfair,
or unreasonable will be voidable
Exercise
• Jessica went to a restaurant managed by
Jeffery. Jeffery told Jessica that the price of the
cocoyam fufu and ebunu ebunu soup was GHC
20 with VAT. Without Vat it would be GHC 15,
Jessica decided on the GHC 15, but refused to
pay after eating.
• Advice Jeffery