Common mistake may be referred to as Identical Mistake, it occurs when both parties enter into a contract on the basis of a false and fundamental assumption.

The doctrine of mistake may perpetuate to arise when making a contract in various manners. An operative mistake involves a mistake that operates in such a way to avoid a contract and hence, this is the only mistake which can be recognised by law. In fact, there are four types of mistake, but this essay will focus on common mistake.

Common mistake may be referred to as “Identical Mistake,” it occurs when both parties enter into a contract on the basis of a false and fundamental assumption. However, due to the fact that both parties were under some mistake, it is not necessary to avoid the contract itself. This can be categorized into four types. However, some academics argue that really there is no law of mistake in the law of contract. Atiyah argues that almost every mistake case can be explained by referring to some other contract principles, such as offer and acceptance, uncertainty and misrepresentation.

Firstly, there can be a mistake as to the existence of the subject matter, which refers to a mistake whereupon the subject matter of the agreement fails to exist or alternatively has ceased to exist, unknown to the parties at the time of the agreement, as shown in Couturier v Hastie which ultimately makes the contract void at common law. This is known as res extincta .In this case, the corn was sold by the master of the ship because it was fermenting. Section 6 of the Sale of Goods Act 1979 states that a contract for the sale of specific good which have perished should be void. Similarity, in the case of Galloway v Galloway the parties’ intended separation deed was deemed void due to the fact that the parties were not legally married. Unknown to them, at the time of their ‘marriage’, the defendants’ wife was still alive, so his current marriage was void. The court held that there was a mutual mistake regarding the facts of the relationships and so the separation was void.

In a rare situation, where the property about to be sold to party A from party B, whereby both parties believe B to own it, is in fact owned by A already(unknowingly to both parties) then the contract is void for common mistake. This was exemplified in Cooper v Phibbs where there was a mistake as to title. In this case the contract was set aside and the contract deemed voidable not void as in this instance common mistake actually gave rise to the equitable right of rescission. This example is known as res sua which means holding a shared mistake that the subject matter already belongs to oneself. In this case the “seller” gave no value for the consideration which is given by the “buyer,” as a salmon fishery that the nephew thought he was leasing from his uncle, later turned out to be owned by the nephew and not the uncle.

The law regarding common mistake can be somewhat conflicting. In Solle v Butcher, the rules governing common mistake were loosened by the addition of requirements for common mistake in equity, as even Lord Steyn stated: -
“Throughout the law of contract two themes regularly recur: respect for the sanctity of contract and the need to give effect to the reasonable expectations of honest men.”

Despite this, the rules made in the Solle v Butcher case were later heavily criticized in the case of Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd. A contract can only be deemed to be ...

Common mistake may be referred to as Identical Mistake, it occurs when both parties enter into a contract on the basis of a false and fundamental assumption.

This is a preview of the whole essay

Document Details

Related Essays

fraustration and common mistake

Examine the different circumstances in which the doctrine of 'mistake' may...

Does the law of England and Wales need a doctrine of common mistake?

Does The Law Of England And Wales Need A Doctrine Of Common Mistake?