⇒ Mistake is a very narrow doctrine → Bell v Lever Bros [1932]: 'if mistake operates at all, it operates so as to negative or in some cases to nullify consent' (Lord Atkin)

⇒ Some areas of mistake lack clarity:

• The terminology is inconsistent
• Clash of policy factors
• Law and equity: a difficult relation

⇒ Mistakes can be of fact or of law: Kleinwort Benson Ltd v Lincoln City Council [1999] confirmed in Brennan v Bolt Burdon [2004]

⇒ There are two types of mistake:

• Agreement mistake (unilateral mistake/mutual mistake)
• Common mistake

⇒ Burrows defines an agreement mistake as follows: ‘a mistake of one party which is not shared by the other party and which may, or may not, be known about the other party’

• This is a good definition. In other words, the contract fails because the parties did not agree to an essential aspect of the contract

⇒ There are two types of agreement mistake:

• Mutual mistake (parties at cross purposes)
• Mutual mistake is where the parties are at completely different odds and both unaware the other party is contracting on an alternative basis (i.e. both parties are mistaken) e.g. Raffles v Wichelhaus (1864)
• Unilateral mistake
• Unilateral mistake is where only one party is mistaken. This can include unilateral mistake as to identiy (Shogun Finance v Hudson [2003]) and unilateral mistake as to the terms of the contract (Hartog v Colin & Shields [1939])

⇒ Agreement mistake is a restricted doctrine

• It is restricted because of the objectivity of the court when assessing if there is a contract or not. In other words, the court will determine if there has been an agreement mistake from what the parties say/do rather than what they think
• See for example Smith v Hughes (1871) and Tamplin v James (1880)

⇒ Often in agreement mistakes there would have been a misrepresentation: Merrill Lynch International v Amorim Partners (2013)

⇒ There are 3 areas where an agreement mistake will be actionable and so the contract will not stand:

• 1) Where there is genuine ambiguity between parties, so there was NO fault by either party: Raffle v Wickelhaus (1864)
• 2) Misleading offer: Scriven Brothers & Co v Hindley & Co [1913]
• 3) Occassionally the law will intervene where one party is more knowledgeable than the other: Hartog v Colin & Shields [1939]

⇒ It is a restricted doctrine, but can nevertheless can invalidate a contract in very specific circumstances

⇒ Inconsistent case law on this, and everybody thought Shogun Finance v Hudson [2003] would clear this up but it did not

⇒ The distinction is, when there is a contract entered face to face inter praesentes) there is a presumption even though the rogue is pretending to be someone else, you want to contract with that person in front of you and there cannot be a mistake

⇒ HOWEVER when they contract on a correspondence basis (inter absentes), the person you are presumed to contract with is the person the rogue is pretending to be - THIS DISTINCTION IS VERY IMPORTANT

⇒ If a contract is entered into to sell your house to a rogue, then the rogue sells the property to a third party, if the contract is void it is considered the property has never left the original owner (therefore there is no valid basis for the rogue to acquire the property). So, when he sells the property to the third party, because he did not have the right to acquire the property he cannot pass it on. So, in this situation we have two parties that need protecting: yourself and the innocent third party

• In Cundy v Lindsay (1878) it was said that if the contract is void for mistake the property will be given back to the original owner
• In Ingram v Little [1961] the contract was void for mistake despite the parties contracting face to face. This case has been criticised - as in Lewis v Averay [1972] - but not overruled.
• The case law was clearly confused, so it was hoped the case of Shogun Finance v Hudson [2003] would clear this up → however, it failed to do so. The House of Lords had a perfect opportunity to eradicate the arbitrary distinction between face to face and correspondence, but it did not do so

⇒ Can there be a unilateral mistake in equity?

• This has been rejected several times: Statoil ASA v Louis Dreyfus Energy Services LP [2008]
• BUT the court has the discretion to refuse an award of specific performance: Denny v Hancock (1870). In other words, if a unilateral mistake does not deem a contract void, equitable relief may be available

⇒ Common mistake = the parties have contracted on the basis of a shared (common) mistake e.g. the parties contracted on something which did not exist at the time of contracting

• It is a narrow doctrine. The default position is that common mistake will not invalidate the contract, unless the mistake renders performance impossible

⇒ Distinction between common law and equity:

• In common law the contract is void if there is common mistake
• In equity the contract is voidable if there is common mistake: Solle v Butcher [1950]. Denning argued in this case that for there to be equitable relief the mistake must be “fundamental” and the innocent party must not be “at fault”

⇒ So when did Denning think a contract would be voidable in equity:

• Misrepresentation
• Common mistake
• “Whenever it is of the opinion that it is unconscientious for the other party to avail himself of the legal advantage which he obtained”

⇒ Mistake at equity is much wider than that in the common law

• There has been some trouble trying to distinguish between mistake at equity and mistake at the common law
• Associated Japanese Bank v Credit Du Nord [1988] makes it clear that common mistake is available in more cases than those of res extincta (i.e. where the subject mater has been destroyed)
• So what makes a mistake ‘fundamental’ for it to fall in the equity category? Hard to say: The Great Peace tries to say that Solle v Butcher was decided incorrectly and mistake only operates at the common law
• Equitable relief = refusal of specific performance and rectification

⇒ E.g. If 2 parties contract about the hire of a car which unknown to both parties had been destroyed the day before by a fire, the contract will be void for common mistake

⇒ See the case of Galloway v Galloway (1914) and Couturier v Hastie (1856)

⇒ Subject matter that NEVER existed:

• Couturier v Hastie is where the subject matter had existed at some point, but what about in cases where the subject matter NEVER existed
• This scenario is quite common in contracts for the sale of goods
• It seems logical that such contracts would also be void, but this was not the position in McRae v Commonwealth Disposals Commission (1951)

⇒ Mistake as to the quality of the good being sold E.g. Where parties contract about a chair where both believe it to be an expensive antique, but turns out to be a fake

⇒ See the case of Bell v Lever Bros (1932) → Lord Atkin said that a mistake as to quality had to be “the mistake of both parties” and a mistake about the “existence of some quality” which made the contract different to the one intended.

⇒ Non est factum means "it is not my deed"

⇒ Non est factum is argued when the contract is very different from what the person believed to be signing

⇒ Very restricted doctrine only used in very serious mistake e.g. Saunders v Anglia Building Society [1971]

• Non est factum only applies to ‘those who are permanently or temporarily unable through no fault of their own to have without explanation any real understanding of the purpose of a particular document, whether that be from defective education, illness or innate incapacity’ OR from being tricked

⇒ An equitable remedy given by the court designed to correct a contract to reflect what it should have said in the first place

⇒ It is argued in very limited circumstances

⇒ Requires:

• A common intention between the party
• A continuing intention between the parties
• A document that fails to represent this common intention

⇒ See the case of Joscelyne v Nissen [1970]