MISTAKE
Q Can the contract be set aside on the grounds of mistake? If operative mistaken can be proven-
contract would be void ab Initio.
Contract-non existence as no consensus ad idem and goods passed must be returned.
Mistake
Bilateral Unilateral
(both parties are mistaken) (one party is mistaken)
Cross purposes
Common mistake
Bilateral mistake
Cross purposes
Each party is mistaken on different issues
Offer and acceptance do not correspond- no meeting of minds
Raffles v Wichelhaus- contract is not formed as absence of mutual understanding on material terms.
When parties mutually misunderstand the terms of the agreement- no contract as parties never
came to an agreement.
Scriven Brothers v Hindley- co contract between the parties due to fault on both sides.
Common mistake
Both parties share the mistake
Should be based on a fundamental assumption
Res Extincta (existence of subject matter)
Galloway v Galloway-D married C assuming his wife was dead but in fact wasn’t dead.
It was held that the separation agreement was void as it had been entered into on the basis of the
common assumption that the parties were married to each other.
S6 Sales of Goods Act 1979-
Where there is a contract for the sale of specific goods, and the goods without the knowledge of the
seller have perished at the time when the contract is made, the contract is void.
, MISTAKE
Couturier v Hastie McRae v Commonwealth
D actually promised on the existence of goods.
Disposals Commission
Once existed but perished. D had assumed the risk of the non-existence of the
Total failure in consideration and buyer was not goods.
liable to pay for it. The decision was to place the risk upon the D.
Has been subject to controversy and debate Could McRae be reconciled with S6? S6 will not be an
However, the courts were not concerned with the construction issue as it could be argued that McRae isn’t caught by
of the contract but whether consideration has failed. the actual wording of S6 since the goods never existed
As parties were under the assumption that the corn was still in and thus cannot perish.
existence and could be sold- void Thus, goods which never existed would be governed
under the flexible approach of McRae and not under S6.
However, could be argued that S6 is only a rule of
construction and can be expelled by proof contrary to
intention(Atiyah)
Although the main contract in McRae is void: D would
be liable under a collateral contract(the goods existed)
but even though consideration will be proven such
solution is deemed artificial.
It is stated that in order to achieve a satisfactory
solution in cases like McRae- S6 should be reformed.
Res Sua-
Cooper v Phibbs – initial impossibility. (buyer owned the property that he was contracting to buy)
Cannot be performed from the start
Mistake as to the possibility of performance
Physical impossibility- Sheikh Brothers Ltd v Ochsner-
Void because the mistake of the parties related to a matter which was essential to the agreement
and neither party had assumed the risk of it been incapable of producing such and such.
Legal impossibility- Cooper v Phibbs
legally impossible as the appellant was already the owner.
Q Can the contract be set aside on the grounds of mistake? If operative mistaken can be proven-
contract would be void ab Initio.
Contract-non existence as no consensus ad idem and goods passed must be returned.
Mistake
Bilateral Unilateral
(both parties are mistaken) (one party is mistaken)
Cross purposes
Common mistake
Bilateral mistake
Cross purposes
Each party is mistaken on different issues
Offer and acceptance do not correspond- no meeting of minds
Raffles v Wichelhaus- contract is not formed as absence of mutual understanding on material terms.
When parties mutually misunderstand the terms of the agreement- no contract as parties never
came to an agreement.
Scriven Brothers v Hindley- co contract between the parties due to fault on both sides.
Common mistake
Both parties share the mistake
Should be based on a fundamental assumption
Res Extincta (existence of subject matter)
Galloway v Galloway-D married C assuming his wife was dead but in fact wasn’t dead.
It was held that the separation agreement was void as it had been entered into on the basis of the
common assumption that the parties were married to each other.
S6 Sales of Goods Act 1979-
Where there is a contract for the sale of specific goods, and the goods without the knowledge of the
seller have perished at the time when the contract is made, the contract is void.
, MISTAKE
Couturier v Hastie McRae v Commonwealth
D actually promised on the existence of goods.
Disposals Commission
Once existed but perished. D had assumed the risk of the non-existence of the
Total failure in consideration and buyer was not goods.
liable to pay for it. The decision was to place the risk upon the D.
Has been subject to controversy and debate Could McRae be reconciled with S6? S6 will not be an
However, the courts were not concerned with the construction issue as it could be argued that McRae isn’t caught by
of the contract but whether consideration has failed. the actual wording of S6 since the goods never existed
As parties were under the assumption that the corn was still in and thus cannot perish.
existence and could be sold- void Thus, goods which never existed would be governed
under the flexible approach of McRae and not under S6.
However, could be argued that S6 is only a rule of
construction and can be expelled by proof contrary to
intention(Atiyah)
Although the main contract in McRae is void: D would
be liable under a collateral contract(the goods existed)
but even though consideration will be proven such
solution is deemed artificial.
It is stated that in order to achieve a satisfactory
solution in cases like McRae- S6 should be reformed.
Res Sua-
Cooper v Phibbs – initial impossibility. (buyer owned the property that he was contracting to buy)
Cannot be performed from the start
Mistake as to the possibility of performance
Physical impossibility- Sheikh Brothers Ltd v Ochsner-
Void because the mistake of the parties related to a matter which was essential to the agreement
and neither party had assumed the risk of it been incapable of producing such and such.
Legal impossibility- Cooper v Phibbs
legally impossible as the appellant was already the owner.
