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1. When will courts recognise a mistake as 'operative'?mistake = makes contract void
types = common/bilateral [non-existence of contract matter,
mistake in ownership title, no operative mistake to quality unless
seen as fundamental], neutral/unilateral
mistake makes contract voidable
operative mistake makes contract void
requirements to be operative
- common assumption as to state of affairs [both parties have
same assumption, neither parties made promise for it to
existence [if was promise – breach of contract]
- non-existence of state of affairs not wither parties fault [if it
was then not be mistake]
non-existence of affairs has to be impossible to reach
- state of affairs dealt with has
bilateral mistake in quality is operative – 5 requirements from the
great peace
unilateral mistake
- mistake as to terms of contract
- mistake as to identity of the other party – whether it’s written
[want to contract with specific person]/face-to-face [assume want
to contract with who is in front] – Hudson case [rogue selling car –
give 4 requirements]
- unilateral mistakes as to terms – identity/terms [one party
mistaken and other knows]
Huran v shield case
- problematic was price – is core
smith v Hughes
- about quality of subject matter
- oats being sold
- sale being carried on by selling on sample containing old oats –
buyer accepted cause all horse eats
- when horse arrived were fresh oats so not suitable
- court had to decide whether ageing of oats was enough to make
it operative – contract remain alive
- buyer should’ve been aware and made sure what kind oats he
wanted – not seller’s responsibility
2. Compare the cases of Bell v Lever Bros.,
Mistake must be about 'an essential and integral element of the subject-matter of the
contract'
Majority said LB's mistake was not fundamental
Court considered mistake no fundamental enough to form mistake
Case sets high standard for bilateral mistake
Clear mistake but majority of hol said not fundamental
, B was chairman of company in West Africa
Lb bought b's company and he was made redundant
On terms of contract - respondent contract agreed to pay appellant £30,000 for
compensation
After a while - lb discovered the b been engaged in secret transactions in coco - had
been dealing on the side [big deal = not meant to uncut your own company]
Breach of duty to protect employer
Lb would have been entitled to just sack instead of paying him
Lb attempted to get £30k back on grounds that settlement agreement had been
entered into on basis of a mistake
Court considered mistake not fundamental enough to form actionable mistake
Sets high standards for bilateral mistake
Fundamental mistake - in terms of legal consequences, if parties sued on terms of
mistake court will grant that
Mistake about terms of Mr b's employment - been going on terms of side transactions
Mr b was entitled to £30k
Need to go to roof of contract and need to leave thing contracted for to be radically
different
Mistake has to be fundamental
Solle v Butcher
Valid in law, but voidable in equity
Case for lease of flat
Mistake of law case
Mistake - whether lease on flat was subject to rent restriction acts
Both parties believed that lease was outside rent restriction acts - so price on flat
£250 yearly
Rent restriction acts did apply so actually amount should have been £140 yearly
Claim - mistake as to law applicable to this lease
Court of appeal found was there was actionable mistake, but it didn’t rise to level of
mistake at law
Lease was valid at common law
Lord denning said was voidable in equity
Historically were 2 different systems of law
Common law = law of people and nobles would dispense law in particular
derestriction
When people couldn’t get relief at common law would approach king to seek
equity [justice, fairness]
Up until 1831 there were two separate legal systems and would sue at different
courts
Either common law/equity
Two have been merged
Equity in context of mistake - after s v b decision there was 2 different types of mistakes
Common law mistake - bilateral, unilateral etc
Equitable mistake - lord denning identified didn’t make contract void but made
it voidable
Important – court tried to use equity>common law to help
though great peace over took that and said no place for equitable and only in
common law can mistake be operative
mistake as to application to rent and tenancy law
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