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Mistake Notes

Law Notes > LAWS202 Law of Contract Notes

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Mistake Friday, 10 September 2010 12:33 p.m.

Contractual Mistakes Act

1. Was contract influenced by a qualifying mistake? (s6(1)(a)) Unilateral mistake - s 6(1)(a)(i) Common mistake - s 6(1)(a)(ii) 'Mutual mistake' - s 6(1)(a)(iii)

2. Did the mistake result in substantial inequality of exchange? (s 6(1)(b))

3. Did the mistaken party contractually assume risk for mistakes? (s 6(1)(c))

4. Was the mistake as to the interpretation of the contract? (s 6(2))



5. Court may grant relief (s 7)

No relief.

What mistake isn't Absence of offer and acceptance Raffles v Wichelhaus Where parties contracted for a ship called the 'Peelus' to ship goods, but both had a different ship in mind. No objective consensus, parties were never ad idem. Contract failed for uncertainty. Misrepresentation S5(2)(c) - misrepresentations will not lead to qualifying mistakes. Frustration Mistakes come before contract, frustration after. Mistakes where contract has allocated risk of mistakes S6(1)(c) - CMA only operates if risk has not been allocated for. Rectification Common law principle not affected by CMA - s 5(2)(b). Historically, rectification was used to correct instruments (e.g. Deeds) which had not correctly spelled out the details of the contract. Elements of rectification from Chartbrook v Persimmons [2009] HL

1. The parties had a common continuing intention, whether or not amounting to an agreement, in respect of a particular matter in the instrument to be rectified

2. There was an outward expression of accord 1) Tipping J in Westland Savings Bank v Hancock says this is unnecessary: just objectively perceivable common intention from words/conduct. Probably not now. 2) Must be 'objectively manifested' - Etablissements Georges et Pal Levy v Adderly Navigation

3. The intention continued at the time of the execution of the instrument sought to be rectified

4. By mistake, the instrument did not reflect that common intention Joscelyne v Nissen [1970] CA Eng Father was to sell his car hire company to daughter. In discussions, daughter agreed to pay some money and her father's living expenses for the house which they occupied together, on separate floors. When contract was created, the payment of expenses was not included. Discussions were not intended to form legally binding relations pre-contract. Daughter did in fact pay expenses for some months, until a falling out, when she refused to pay. Father sought and was granted rectification, despite not having a pre-contractual document. Dundee Farm v Bambury [1978] CA?
Adopted Joscelyne rectification. Farmer's solicitor sold 4 plots of land instead of 3 - both parties had common intention for three - although they'd never excluded the house or named the number of acres sold, they had walked around the farm, identifying the boundaries. Evidence Evidence of subjective intentions is permissible in establishing rectification: Vector Gas. Level of proof Regular civil burden of balance of probabilities, but high evidential requirement as contract purports to be agreed record ofbargain, especially in circumstances of commerce, with legal advice. - South Island Deepwater Fisheries v Attorney-General (1996)

Non Est Factum (not my deed) Originally applied to the illiterate/blind when signing a contract. If successful, renders contract void. Saunders v Anglia Building Society Gallie owned long-term lease in house, wanted to give to nephew Parkin. Parkin makes a deal with Lee to get Gallie to transfer title to his name, get a mortgage on it from Anglia, then share money. Contract Page 39

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