Casebook ch. 13: Mistakes
I) Common Mistake:
If possibility exists that contract becomes void due to common mistake of
parties= initial impossibility
Section 1: Contractual allocation of the risk
One cannot rely on legal doctrine of mistake if burden if risk is only placed on
one party as to subject matter
William Sindall v Cambridgeshire County Council, 1994
Builders wanted to purchase land from the council (def.) for 5 mio.
B wanted no liabilities or public rights that would affect the land
By time builders wanted to build on it, land had lost value of half the purchase
price due to fall in land values
B discovered apart from value, foul sewer underneath land, which they could not
build on then
Hence claimed rescission for Misrep. As well as common mistake for fall in value,
with which they claimed back their purchase price
Held on appeal: to possible to rescind since I) contract terms had risks in them,
hence should be known to purchasers; hence law of mistake couldn’t apply since
knowledge was there and II) council had no actual knowledge of sewer’s
existence and made a reasonable investigation
Hoffman LJ: first determine who bears risk of mistake before applying doctrine of
mistake (Contractual allocation of risk)
Only where both made it, contract can become void
Since its stated in express terms that the burden of mistake cannot fall upon the
seller, unless he had knowledge of it (in this case had not known of sewer),
contract cannot be void upon mistake
B) Implied allocation of risk
McRae v Commonwealth Disposals Commission, 1951
High court of Australia (not binding on English jurisdiction)
See facts in notes (oil tanker that never existed)
Plaintiffs sued for breach of contract, but commission claimed subject matter of
contract didn’t exist hence contract is void
Held: Plaintiffs entitled to damages
Dixon and Fullgar JJ: no implied term that tanker was in fact there; distinguish
facts to Courier v Hastie
There was a common assumption on fact and the buyers relied upon it, hence
there WAS a contract and since there was no tanker the commission was in
breach and McRae was entitled to any damages
C) Event occurs as result of the fault of one of the parties
Clear that there is an express or implied allocation of risk of mistake; due to one
party’s fault hence doctrine of mistake doesn’t apply
I) Common Mistake:
If possibility exists that contract becomes void due to common mistake of
parties= initial impossibility
Section 1: Contractual allocation of the risk
One cannot rely on legal doctrine of mistake if burden if risk is only placed on
one party as to subject matter
William Sindall v Cambridgeshire County Council, 1994
Builders wanted to purchase land from the council (def.) for 5 mio.
B wanted no liabilities or public rights that would affect the land
By time builders wanted to build on it, land had lost value of half the purchase
price due to fall in land values
B discovered apart from value, foul sewer underneath land, which they could not
build on then
Hence claimed rescission for Misrep. As well as common mistake for fall in value,
with which they claimed back their purchase price
Held on appeal: to possible to rescind since I) contract terms had risks in them,
hence should be known to purchasers; hence law of mistake couldn’t apply since
knowledge was there and II) council had no actual knowledge of sewer’s
existence and made a reasonable investigation
Hoffman LJ: first determine who bears risk of mistake before applying doctrine of
mistake (Contractual allocation of risk)
Only where both made it, contract can become void
Since its stated in express terms that the burden of mistake cannot fall upon the
seller, unless he had knowledge of it (in this case had not known of sewer),
contract cannot be void upon mistake
B) Implied allocation of risk
McRae v Commonwealth Disposals Commission, 1951
High court of Australia (not binding on English jurisdiction)
See facts in notes (oil tanker that never existed)
Plaintiffs sued for breach of contract, but commission claimed subject matter of
contract didn’t exist hence contract is void
Held: Plaintiffs entitled to damages
Dixon and Fullgar JJ: no implied term that tanker was in fact there; distinguish
facts to Courier v Hastie
There was a common assumption on fact and the buyers relied upon it, hence
there WAS a contract and since there was no tanker the commission was in
breach and McRae was entitled to any damages
C) Event occurs as result of the fault of one of the parties
Clear that there is an express or implied allocation of risk of mistake; due to one
party’s fault hence doctrine of mistake doesn’t apply
