MISTAKE
Main difference in mistake that in misrepresentation a person having full knowledge induced
the other with lesser knowledge by making an untrue statement. But in mistake both parties
remain ignorant about the error, Unknown to both the parties the thing is happened known
mistake. It must be prior to the contract. In mistake, the guilty party feel sorry and contract
can be voided and automatically finished from the start and damages are not provided.
MISTAKE OF FACT
A mistake of fact occurs when one or both parties hold an incorrect belief about a critical
factual element at the time of contract formation.
MISTAKE OF LAW
A mistake of law involves a misunderstanding or ignorance of legal principles or the
legal implications of the facts. This could mean entering into a contract under the
mistaken belief about how the law applies to the circumstances of the agreement, such as
the legal ownership of an asset. Historically "ignorance of the law is no excuse” and if a
contract was entered based on a mistake of law then courts would not grant relief because
allowing relief for mistakes of law could encourage ignorance and undermine the stability of
legal transactions.
Exceptions where court allow relief
Court held that if a mistake related to private rights rather than a mere
misunderstanding of the law then it would not be considered a mistake of law but
rather a mistake of fact. As a result, relief might be granted in such instances [Cooper
v Phibbs (1867)].
House of Lords departed from the traditional principle that relief is not typically
granted in cases where the mistake is one of law rather than fact and relief may be
granted even if the mistake is one of law, particularly if denying relief would lead to
an unjust outcome [Kleinwort Benson Ltd v Lincoln City Council (1999)].
Court of Appeal applied the principles established in Kleinwort Benson Ltd v Lincoln
City Council [1999] and held that if both parties to a contract were mistaken about the
legal implications of their contract and this mistake was a essential aspect of the
contract then the contract could be voided [Brennan v Bolt Burdon (2004)].
, The court considered that if there was uncertainty or doubt regarding the law in
question and both parties were aware of the lack of clarity surrounding a legal point
and still proceeded with the agreement then their contract would remain valid because
the mistake was insufficient to void the contract [Great Peace Shipping Ltd v
Tsavliris Salvage Ltd (The Great Peace) (2002)].
BILATERAL MISTAKES
Bilateral mistake occurs where both parties in a contract are mistaken about a critical
element of their agreement. It has two principles when parties share their mistakes and when
parties cannot share the mistake.
ABSENCE OF GENUINE AGREEMENT
In circumstances where there is an absence of genuine agreement, the parties are each
mistaken but they do not share a mistake and these separate mistakes are sufficiently essential
to show that no contract can be created because parties are at “cross purposes” and that offer
and acceptance do not correspond and it cannot be said objectively that what was intended by
the parties.
The terms of a contract are based upon objective interpretation and not upon
subjective state of mind [Centrovincial Estate vs Merchant Investor (1983)].
The court applied an objective test and stated that a reasonable person would not have
been able to state with certainty which sailing had been agreed and the contract was
void [Raffles vs Wichelhaus (1864)].
Court held that no contract would be formed on objective standards in case of non-
achievement of consensus ad idem as self-imposed obligations not consistent but
complemented by mistaken beliefs [Scriven Bros & Co vs Hindley & Co (1913)].
COMMON MISTAKES
Common mistake occurs where both parties in a contract are mistaken about a critical
element of their agreement and they share the same mistaken assumption.
Lord Atkin particularly describes the common mistake and impact of the consent of
the parties involved and states that contract is void where it appears to be formed but
Main difference in mistake that in misrepresentation a person having full knowledge induced
the other with lesser knowledge by making an untrue statement. But in mistake both parties
remain ignorant about the error, Unknown to both the parties the thing is happened known
mistake. It must be prior to the contract. In mistake, the guilty party feel sorry and contract
can be voided and automatically finished from the start and damages are not provided.
MISTAKE OF FACT
A mistake of fact occurs when one or both parties hold an incorrect belief about a critical
factual element at the time of contract formation.
MISTAKE OF LAW
A mistake of law involves a misunderstanding or ignorance of legal principles or the
legal implications of the facts. This could mean entering into a contract under the
mistaken belief about how the law applies to the circumstances of the agreement, such as
the legal ownership of an asset. Historically "ignorance of the law is no excuse” and if a
contract was entered based on a mistake of law then courts would not grant relief because
allowing relief for mistakes of law could encourage ignorance and undermine the stability of
legal transactions.
Exceptions where court allow relief
Court held that if a mistake related to private rights rather than a mere
misunderstanding of the law then it would not be considered a mistake of law but
rather a mistake of fact. As a result, relief might be granted in such instances [Cooper
v Phibbs (1867)].
House of Lords departed from the traditional principle that relief is not typically
granted in cases where the mistake is one of law rather than fact and relief may be
granted even if the mistake is one of law, particularly if denying relief would lead to
an unjust outcome [Kleinwort Benson Ltd v Lincoln City Council (1999)].
Court of Appeal applied the principles established in Kleinwort Benson Ltd v Lincoln
City Council [1999] and held that if both parties to a contract were mistaken about the
legal implications of their contract and this mistake was a essential aspect of the
contract then the contract could be voided [Brennan v Bolt Burdon (2004)].
, The court considered that if there was uncertainty or doubt regarding the law in
question and both parties were aware of the lack of clarity surrounding a legal point
and still proceeded with the agreement then their contract would remain valid because
the mistake was insufficient to void the contract [Great Peace Shipping Ltd v
Tsavliris Salvage Ltd (The Great Peace) (2002)].
BILATERAL MISTAKES
Bilateral mistake occurs where both parties in a contract are mistaken about a critical
element of their agreement. It has two principles when parties share their mistakes and when
parties cannot share the mistake.
ABSENCE OF GENUINE AGREEMENT
In circumstances where there is an absence of genuine agreement, the parties are each
mistaken but they do not share a mistake and these separate mistakes are sufficiently essential
to show that no contract can be created because parties are at “cross purposes” and that offer
and acceptance do not correspond and it cannot be said objectively that what was intended by
the parties.
The terms of a contract are based upon objective interpretation and not upon
subjective state of mind [Centrovincial Estate vs Merchant Investor (1983)].
The court applied an objective test and stated that a reasonable person would not have
been able to state with certainty which sailing had been agreed and the contract was
void [Raffles vs Wichelhaus (1864)].
Court held that no contract would be formed on objective standards in case of non-
achievement of consensus ad idem as self-imposed obligations not consistent but
complemented by mistaken beliefs [Scriven Bros & Co vs Hindley & Co (1913)].
COMMON MISTAKES
Common mistake occurs where both parties in a contract are mistaken about a critical
element of their agreement and they share the same mistaken assumption.
Lord Atkin particularly describes the common mistake and impact of the consent of
the parties involved and states that contract is void where it appears to be formed but
