A detailed breakdown of mistake in regards to contract law including the cases and a brief explanation of them to maximize understanding. Covers: misrepresentation, mistake, duress, undue influence and illegality.
Mistake
5 factors that invalidate parties’ genuine consent to enter into a contract; they
render such contracts void or voidable.
- Misrepresentation
- Mistake
- Duress
- Undue influence
- Illegality
Required ‘consensus ad idem’ in a contract however, if there is a mistake then the
‘meeting of minds’ is not present, and the contract is void.
Courts are reluctant to get involved.
- Doctrine of mistake should not help parties escape ‘bad bargains.
Both parties have opportunities to make sure they will achieve what they
want as a result of the contract.
- Businesses need commercial certainty.
- Courts should not be quick to eradicate contracts.
Contract law is to uphold contracts!
- Declaring a contract void can adversely affect third party rights.
Particularly in contract law with goods, if a contract is deemed void by a
court, the third party receiving the goods as a result of the contract, may lose
out/have their rights impaired.
Operative mistake- mistake must be fundamental and exist at the time the contract
was formed.
- Common mistake- both parties have made the same mistake.
Mistake as to subject matter (must have ceased to exist before the contract
was made, but was unknown to the parties when they entered into the
contract)
Courturier v Hastie (1856)- goods were destroyed before the contract
was formed- void for mistake. Now upheld under S6 Sale of Goods Act
1979
McRae v Commonwealth Disposals (1951)- implied warranty that the
goods existed therefore was a breach of contract, not an operative
mistake.
Courturier- the goods did once exist, but they were destroyed by the
time the contract was made and the parties were unaware of this.
McRae- breach of the warranty/promise under which the defendant
said the goods existed and gave their location.
If a party goes as far as to promise something as fact, then they are
taking a risk and they will be held liable if it is not true.
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