Parties are at cross purposes and there has been no consensus ad idem.
Mutual mistakes
The objective facts are equivocal, and the subjective states of mind of the parties are at odds.
Raffles v Wichelhaus - two ships called the “Pierless”. No clear reasons. Pollock says it is a mutual mistake case.
Scriven v Hindling - Sale of hemp and tow. Seller referring to tow, buyer referring to hemp. No contract.
Unilateral mistakes
Mistake as to term
Smith v Hughes- P supplied new oats, D thought he was buying old oats. P knew D wanted to buy old oats and that they’d made a mistake. Mere mistake as to age of oats did not render contract void, but per Blackburn J, if mistake had gone to whether they had been warranted to be old oats, parties are not ad idem, there is no contract.
Hartog v Colin and Shields - Offer to sell at 10 pence per pound instead of each. D refused to deliver goods. Mistake by seller; and no way buyer could have thought that it reflected their true intention- negotiations had taken place as price each.
Taylor v Johnson –
Smith v Hughes follows subjective theory (contract is void ab initioif one party enters under a serious mistake as to contract or existence of fundamental term and other party has knowledge).
Contrast with objective theory, which is concerned with outward manifestations and not real intent. Only voidable.
Adopted objective theory; quoted Denning in Solle: ". . . once a contract has been made, that is to say, once the parties, whatever their inmost states of mind, have to all outward appearances agreed with sufficient certainty in the same terms on the same subject matter, then the contract is good unless and until it is set aside for failure of some condition on which the existence of the contract depends, or for fraud, or on some equitable ground."
"Neither party can rely on his own mistake to say it was a nullity from the beginning, no matter that it was a mistake which to his mind was fundamental, and no matter that the other party knew that he was under a mistake."
Precludes operation of common law unilateral mistake as to term. However, mistake in equity? (see below)
Mistake as to identity
Identity must be material
Boulton v Jones - D sends servant to P’s shop with an order addressed to Mr Brocklehurst. P crosses out name, writes own, and supplies goods. D (through servant) accepts them. Identity material because goods means of paying off debt owed Brocklehurst.
Identifiable person, contracting at a distance
Cundy v Lindsay - P (Lindsay) receives distance order from certain address, signed as known respectable firm. P knew actual address different, but nonetheless sends the goods. Rogue doesn’t pay, sells them to D (Cundy) and disappears.
Held no contract by HoL- did not intend to deal with the rogue, but with the firm.
Carter – says unsatisfactory decision – L intended to deal with that address? No analysis of whether they should have taken steps to verify address- basically party took advantage of its own mistake to defeat rights of innocent third party.
Shogun Finance v Hudson - sale of car of at distance. Rogue had Patel’s driving license- company checked credit rating and gave him the finance. HoL held no contract (like Cundy). Nicholls and Millett LJJ dissented.
Not an identifiable person, dealing at a distance
Usually called fraud.
King’s Norton Metal Co v Edridge, Merrett and Co - rogue posed as non-existent company. Rogue sells goods on and disappears. Held P intended to contract with the author of the letter; there was a contract; no mistake as to identity.
Law presumes that where A and B deal face to face, A intends to deal with the person physically present.
Phillips v Brooks – Rogue produced cheque book claiming to be Sir George, P checked address, and R ran off with ring. Sold it. Contract held valid (only voidable)- Horridge J: P’s subjective intention not to contract with anyone else not enough. Inferred that P intended to deal with person physically present in his shop (identified by sight & hearing), but that he would not have done so but for the fraudulent misrepresentations. Voidable only. Could not get ring back.
Held looking up name in directory insufficient to rebut presumption.
Ingram v Little - After drive with rogue agreed on price. P declined payment by cheque and would only accept cash. Changed mind when he said he was PGM Hutchinson and they checked address. Rogue sells it to D. P sues D for conversion.
No contract. P intended to deal with the person they thought they were dealing with and not the person before them.
Acknowledged presumption, and made clear that it could only be rebutted by clear evidence.
Reference made to fact that any cheque sale proceeded on footing that he was PGM Hutchinson.
Sufficient evidence to rebut presumption.
Lewis v Avery - Rogue pretends to be famous actor. P allows him to take car. Sold to Avery.
Applying Phillips - contract. Applying Ingram - no contract.
Held a contract, but a voidable one (preferred Phillips). Property could not be recovered.
Denning MR & Phillimore LJ - nothing to rebut presumption.
Megaw LJ - viewed the mistake as one going to a mere attribute of the rogue, namely, his creditworthiness.
Denning MR condemned fine distinctions between contracting & releasing goods, and between identity & attributes.
Reasoning unsatisfactory. But Denning LJ says the two above decisions cannot be reconciled.
Then says mistake of identity can never render a contract void, only voidable- doubts Ingram v Little.
Taken literally, this is inconsistent with Cundy v Lindsay; therefore has come under criticism.
Shogun Finance - Phillips and Walker LJJ agree with Phillimore LJ and say (in obiter) that it is a very strong presumption.
Lords Millett and Walker hold Ingram to be bad law.
Porter v Latec Finance - son obtains loans in father’s name, and sets up a complex fraud scheme where one bank (Latec) is paying money on his behalf directly to another bank (Porter). Latec argued money paid under a mistake and therefore could recover it because no contract.
Majority: no mistake; facts were that L were making a payment on behalf of son; identity of son was not fundamental.
Minority (Kitto and Windeyer JJ) disagree and say that the loan was intended not for son but for father. In a minority but they both assume you can deal face to face and make this sort of mistake and it will render transaction void.
Windeyer J referred to Phillips as shaky.
But:
Dissenting
Before Denning doubted Ingram in Lewis
Facts not similar to 3 English cases.
To extent that matter has been discussed subsequently in Australia, Lewis treated as authoritative.
Unilateral mistake in equity
Taylor v Johnson
Quoted Dixon CJ and Fullagar J in Svanosio: “difficult to conceive any circumstances in which equity could properly give relief by setting aside the contract unless there has been fraud or misrepresentation or a condition can be found expressed or implied in the contract.”
“Presumably, their Honours were referring to "fraud" in the wide equitable sense which includes unconscionable dealing.”
Rule: “[A] party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension.”
Written contract, D sells two plots of land cheaply but had made a mistake because they thought the price was per acre. NSWCA: on facts purchaser ought to have known they couldn’t be getting that much land for that little money.
HC: can the purchaser successfully argue specific performance? Said there was a unilateral mistake in equity.
There was deliberate concealment on the facts, but this is not required. Easy to regard as unconscionable here because the other party knew of the mistake and contracted anyway.
Leibler v Air New Zealand - not necessary for the non-mistaken party to deliberately conceal the mistake; sometimes enough that they merely leave the other party under a misapprehension. Mistaken party's solicitor had erroneously deleted from an agreement a clause which should only have been amended, not deleted, and the other party, knowing that a mistake had been made, concluded the agreement without drawing attention to the mistake.
Smith v Smith - NSWSC: The essential elements are, first, that one person enters into a contract under a serious mistake about its content in relation to a fundamental matter; second, that the other party is aware that circumstances exist indicating that the first person is entering into the contract under a serious mistake about the content or subject matter of that aspect of the contract; and, third, that the second party deliberately sets out to ensure that the first party does not become aware of the existence of the mistake, either by positive acts or omitting to bring it to their attention.
Enough that one party becomes aware of the mistake. Don’t have to deliberately set out to ensure mistaken party does not become aware. Positive act not required; mere omission to tell them may be enough.
XCB v Creative Brands – VSC - Whelan J – Liebler had special circumstances (agreement completely at variance with previous discussions, considerable complexity of drafting problems, fundamental importance of deleted provision, closeness of parties).
It seems to me that something more than mere knowledge of the mistake and a failure to correct is required.
Mere knowledge of a mistake and a failure to correct will be sufficient only "in some circumstances", and those circumstances will be "special."
