Mistake

Question 1

If a contract is affected by an ‘operative’ mistake, the contract is

Answer 1

void

Question 2

Void

Answer 2

the contract has no legal effect from the outset

Question 3

Common mistake

Answer 3

requires the same mistake to have been made by both the parties, usually concerning the existence or identity of the subject matter of the contract

Question 4

When will common mistake render the contract void?

Answer 4

common mistake as to the existence of the subject matter

Question 5

When will common mistake NOT render the contract void?

Answer 5

common mistake as to a fact/quality fundamental to the agreement (eg value of an artwork) does not void the contract; will only be void in the most severe instances of mistake

Question 6

in a scenario where one of the parties is mistaken because he has been careless or reckless (Tamplin v James), rather than because of ambiguity/misrepresentation, who will be at fault?

Answer 6

the party at fault will be bound by the agreement

Question 7

What is mutual mistake?

Answer 7

mutual mistake occurs when both parties make a fundamental mistake in respect of a contract term, leading to a lack of genuine mutual consent

Question 8

test for mutual mistake

Answer 8

test of reasonableness: would a reasonable person have taken the agreement to mean what the parties thought it meant?

Question 9

if the parties are mutually mistaken but are at cross-purposes, the contract may be held

Answer 9

void for mutual mistake

Question 10

How is mutual mistake assessed?

Answer 10

the courts look at the words and conduct of the parties

Question 11

If the seller is referring to a red car, while the buyer believes they are negotiating for a blue car, is the contract between the buyer and seller valid?

Answer 11

No, the contract is void due to mutual mistake

Question 12

unilateral mistake

Answer 12

where only one party is mistaken and the other party knows, or is deemed to know, of the mistake

Question 13

unilateral mistake renders a contract

Answer 13

void

Question 14

to rely on unilateral mistake, the mistaken party must provide evidence to satisfy what 3 following conditions?

Answer 14

1. the other party was aware, or should have been aware of the first party’s mistake at the time the contract was made
2. the mistake was in respect of a term that induced the first party to enter into the contract, not a collateral matter (a term not mentioned in the contract)
3. the mistaken party was not at fault – e.g. if the mistaken party is careless/negligent in reaching his mistaken conclusion, he cannot rely on unilateral mistake

Question 15

general rule under L’Estrange v Graucob

Answer 15

a person is bound by the terms of any instrument which they sign or seal even though they did not read it or did not understand its contents

Question 16

Where a person signs a document or executes a deed under a mistaken belief as to the nature of the document, they may raise the defence of

Answer 16

non est factum (‘it is not my deed’)

Question 17

A plea of non est factum may be available where the mistake was due to either:

Answer 17

a) the blindness, illiteracy, or senility of the person signing; or

b) a trick or fraudulent misrepresentation as to the nature of the document, provided that person took all reasonable precautions before signing.

Question 18

If the contract is void for mistake, it is about

Answer 18

identity

Question 19

If the contract is voidable for misrepresentation, it is about

Answer 19

attributes

Question 20

When would the court agree to rectify an error in a contract?

Answer 20

if there is clear evidence of prior common intention and a mistake to suggest that the contract did not reflect their common intention