Summary LW4001 Contract Law - Mistake

Chapter 13 – Mistake

A mistake relates to situations where the parties enter into a contract based on a
fundamental misunderstanding. Unlike misrepresentation, a mistake does not require a
statement being made – the error arises from the parties themselves.



1.Types of Mistakes

There are three broad categories

A) Common Mistake
(Both parties make the same mistake)

The contract may be void if the mistake is fundamental enough

Key scenarios

(1) Mistake as to the existence of subject matter
If goods do not exist at the time of the subject matter
- Contract Void (Couturier v Hastie)
- Sale of Goods Act 1979



(2) Mistake as to title
A person cannot buy what they already own (Cooper v Phibbs)



(3) Mistake as to quality
Very narrow category: a mistake makes the subject matter essentially different
 Bell v Lever Bros – mistake must go to the substance, not just value

Modern law allows for equitable common mistake via Great Peace, but this

requires a very high threshold:

- A fundamental common assumption
- No allocation
- No adequate remedy in contract