Mistake Contract

a mistake incorrect understanding 1 or more parties contract , may used grounds invalidate agreement. common law has identified 3 types of mistake in contract: common mistake, mutual mistake, , unilateral mistake.

common mistake occurs when both parties hold same mistaken belief of facts. demonstrated in case of bell v. lever brothers ltd., established common mistake can void contract if mistake of subject-matter sufficiently fundamental render identity different contracted, making performance of contract impossible (see svanosi v mcnamara). in great peace shipping ltd v tsavliris salvage (international) ltd, court held common law grant relief against common mistake, if test in bell v. lever bros ltd made out. if 1 party has knowledge , other not, , party knowledge promises or guarantees existence of subject matter, party in breach if subject matter not exist.
mutual mistake occurs when both parties of contract mistaken terms. each believes contracting different. courts try uphold such mistakes if reasonable interpretation of terms can found. however, contract based on mutual mistake in judgment not cause contract voidable party adversely affected. see raffles v. wichelhaus.
unilateral mistake occurs when 1 party contract mistaken terms or subject-matter. courts uphold such contract unless determined non-mistaken party aware of mistake , tried take advantage of mistake. possible contract void if there mistake in identity of contracting party. example in lewis v. avery lord denning mr held contract can voided if plaintiff can show that, @ time of agreement, plaintiff believed other party s identity of vital importance. mere mistaken belief credibility of other party not sufficient.




^ bell v. lever brothers ltd. [1931] e.r. rep. 1, [1932] a.c. 161
^ svanosi v mcnamara [1956] hca 55
^ great peace shipping ltd v tsavliris salvage (international) ltd [2003] ewca civ 1407
^ mcrae v commonwealth disposals commission [1951] hca 79
^ raffles v. wichelhaus (1864) 2 hurl. & c. 906.
^ smith v. hughes [1871]; see taylor v johnson [1983] hca 5
^ lewis v. avery [1971] 3 er 907