Operative mistake
a mistake which is recognised in the law of contract as preventing a contract from taking legal effect - contract will be void
3 categories of mistake
- common mistake
- occurs when both parties to an agreement are suffering from the same misapprehension - mutual mistake
- occurs where both parties are mistaken but they are mistaken about different things - unilateral mistake
- occurs where only one party is mistaken and the other party knows, or is deemed to know of the mistake
What are the 3 circumstances where common mistake will not operate?
- mistake is not fundamental
- one party is at fault
- contract makes provisions for the issue
How does the court judge the conduct of the parties to assess if contract is valid in a mutual mistake?
objectively; if a reasonable person, observing negotiation would have concluded one party’s conduct that was accepting the offer, then contract is valid despite that party’s mistake.
What are the 3 main potential types of unilateral mistake?
- mistake by offeror in expressing their intention
- mistake as to nature of document signed (e.g. illiteracy etc)
- mistake as to person’s identity
What is the legal status of the contract where there is a unilateral mistake as to identity in a face to face setting?
The contract will be void if seller can persuade court that identity of buyer and not their attributes was of vital importance to the contract.
What is the difference between void under mistake and voidable under misrepresentation when discussing mistakes as to person’s identity?
voidable under misrepresentation= title still passes, cannot take away good from third party who dealt in good faith
void under mistake= third party must return good to seller because the fraudster never had title to sell the goods to third party, so title never passed
