INTRODUCTION
Mistake in the law of contract can be like a small crack in a foundation that leads to a bigger collapse. When parties enter into an agreement, a misunderstanding or error about key terms this can change everything. Mistake means an error, misconception or misunderstanding, an erroneous belief. Mistake is a type of vitiating factor that negates one parties consent. Mistake arises where one party is mistaken about some aspect of the contract that is being entered into and that party cannot be said to be consenting to it because that party thinks that they are consenting to something different. It is important to note that at common law, mistake renders a contract void ab initio (meaning the contract is void from the beginning.). This article will discuss the general principles of mistake, types of mistake and the two special remedies where a mistake relates to a written document with the aid of case law.
GENERAL PRINCIPLES
To begin with, there are principles that the courts consider when determining if there has been a sufficient mistake to render a contract void ab initio. Therefore, it is important to understand the general principles governing the two types of mistakes because these general rules apply to both types of mistake and should be understood hand in hand. There are three types of general principles namely the objective principle, the mistake must precede the contract and the mistake must induce the contract.
* The Objective Principle: this principle occurs where the courts will look at the facts objectively to
determine if there has been a mistake sufficient to make the contract void [2].
* The mistake must precede the contract: at this point the mistake must be made before the contract is
completed or rather in order for the contract to be set aside, there must be a common mistake made
during the formation of the contract and sale [3].
* Mistake must induce the contract: a mistake will negate consent if it was induced to mistaken the other
party.
TYPES OF MISTAKE
There are two types of mistake in contract law namely;
1. Common mistake
2. Cross purpose mistake
These two types of mistake where established as per the case of Roland Leon Norton v Nicholas lostrom [4]
1.COMMON MISTAKE
Common mistake is usually known as an Identical mistake or Shared mistake. Basically this is when all the parties to a contract are mistaken about a fundamental matter of fact, both parties make the same mistake. For example, if you and another party enter into a contract to buy a piece of equipment, but neither of you realize the equipment doesn’t work, at that point it can be said that a common mistake has occurred. It is important to note that a contract won’t be rendered void for common mistake if the mistake due to the fault of one party because as earlier stated it should be a shared mistake. The contract will be rendered void only if it amounts to a Fundamental mistake, In the case of Bell v Lever Brothers [5] it was said that “a contract will not be void if the mistake is not an essential and integral part of a contract.” There are three specific situations where the courts will find a Fundamental mistake, (1) if there has been a mistake as to the existence of subject matter also referred to as Res Extincta this usually involves mistakes concerning goods, (2) Mistake as to Title which is also known as Res Sua this is also sufficient to render a fundamental mistake, (3) we have Mistake as to Quality of the subject matter, this sufficiently fundamental to render a contract void.
2.CROSS PURPOSE MISTAKE.
This is the second type of mistake it is basically the opposite of what common mistake is and it is also known as non-identical mistake, and it occurs where each party has a different view of the situation or the contract that this being entered into. It is important to note that cross purpose mistake involves two other mistake namely;
* Mutual Mistake, this type of mistake is where each party makes a mistake but they are different
mistakes.
* Unilateral Mistake, this is where only one party is mistaken
If there has been a unilateral mistake over the terms of a contract, at that point the contract will be rendering void regardless of whether the term is fundamental or not. In the case of Hartog v Colin & Shields [6]. it was held that there was no contract between the complaint and the defendant, and that any contract would be void by the mistake of the term which was ‘the hare skin price’. The court further said that there is duty to correct a mistake that is known to not be the real intention of the person making it.
However, when looking at mistake in the law of contract it is cardinal to note that we also have what is known as the Face – Face principle. Under this principle, if there has been a face to face contact between the parties there is strong presumption that the person in front is the person with whom you intend to contract with and be bound by the terms of that contract. Where parties make a contract at a distance such as through telephone, at this point it will be easier to establish mistake as to identity. To better understand this, we can look at the case of Lewis v Averay [7] where the plaintiff wanted to sell his car, he met a rogue that was impersonating a famous actor and he was interested in buying the car. They agreed on a price and the rogue wanted to pay by cheque but the plaintiff asked for an identification card and the rogue presented a pass for pinewood studios and his name and photography. Once rogue had the car he sold it to the defendant Mr Averay for a cheaper. The cheque that was given to Mr Lewis had bounced back and rogue had disappeared. The plaintiff argued that there had been mistake as to identity of the buyer, which meant that the contract did not exist. The issue was what the effect of mistaken identity was on a contract and whether there was a valid contract between Mr Lewis and the rogue for the car. The courts held that the mistake to the real identity of the rogue did not prevent a valid contract him and Mr Lewis. There was a face to face interaction, where the law presumes contract. However, this was fraud and impersonation by the rogue which would render a contract voidable and it could be set aside and this must be done before a third party acquires the rights. In this case the contract was not set aside before Mr Averay, in good faith, purchased the car.
MISTAKES RELATING DOCUMENTS
Where a mistake relates to a document there are two special remedies which are Non Est Factum and Rectification.
1. Non Est Factum, this is a Latin phrase which means ‘this is not my deed’. Where a person signs a document believing it to be something totally different from what it actually is the common law remedy for Non Est factum will render the contract void. The person wanting to use this remedy must prove three things that:
* The signature was induced by fraud or mistake.
* That they made a fundamental mistake as to the nature of the document.
* They were not careless when signing the document.
2 . Rectification, this is where a written document is alleged not to accurately reflect the intention
of the parties the equitable remedy may at time allow for the written document to be altered so
that it coincides with the true agreements of the parties. In Craddock Bros v Hunt [8], one party
agreed to buy the other’s house, while their oral agreement excluded an adjoining yard from the
sale, they eventual had a written contract. Equity granted them rectification of the written
document, so the buyer was not allowed to keep the yard.
In conclusion, it can be said that this article has discussed the general principles of mistake which
are the objective principle, the mistake must precede the contract and the mistake must induce the
contract. We have further discussed the types of mistake which are common mistake and cross
purpose mistake and lastly we’ve discussed the special remedies relating to documents which are
Non Est factum and rectification, all this with the aid of case law.
REFERENCES
BOOKS
Black’s Law Dictionary.
CASE LAW
Smith V Hughes (1870) LR 6 QB 597.
Amalgated Investment and Property Co Ltd v John Walker & Sons Ltd [1977] 1 WLR 164.
Roland Leon Norton v Nicholas Lostrom (2010) Z.R. 360.
Bell v Lever Brothers Ltd [1931] UKHL 2).
Hartog v Colin & Shields [1939] 3 ALL ER 566.
Lewis v Averay [1972] 1 QB.
Craddock Brothers ltd v Hunt [1923] 2 Ch 136.
About the Author:
Elizabeth Mukeya is a Second -year law Student at the University of Lusaka and currently serving as Researcher at Legal Aid Initiative