2. Mistake as to the terms of the contract
Such a mistake will arise where one party makes an offer to another and he is aware the other person is fundamentally mistaken as to the nature of the promise contained in the offer. This type of mistake is now very rare.
Hartog v Collins and Shield (1939)
The defendants had animal skins for sale, the custom of the industry was to price them per piece. But by mistake they offered them priced per pound, which was far cheaper so the buyers accepted this offer. When they realised their mistake the sellers refused to deliver the skins and were sued. Held no contract because the buyers were aware of the seller’s mistake.
The mistake is operative when: -
· One party is generally mistaken over a material detail that had the truth been known he would never have entered into the contract
· The other party ought to have reasonably known of the mistake
· The mistake cannot be operative if the other party was not aware of it.
Woods v Scarth (1858)
The defendant was to lease a pub from the plaintiff who had told his clerk to inform the plaintiff that there was also a one off fee as well as the annual lease, however the clerk failed to mention this. held there was still the lease but the one off sum didn’t have to be paid as the reasonable onlooker would not have been aware it was part of the contract.
The common law rules of Caveat Emptor (buyer beware) and the Sale of Goods Act have substantially reduced the need to plead this type of mistake.
Documents mistakenly signed
This type of mistake occurs when a person signs a written contract that is substantially different from the one he thought he was signing. This type of mistake is known as Non Est factum (this is not my deed). The rule originated in medieval times when people were illiterate so is rarely used today. General the rule ‘you are bound by what you sign’ applies (L’estrange v Graucob 1934).
In order to rely on non est factum the following must be proved by the claimant: -
· The document which he signed is radically different from the one he intended to sign.
· He was not careless in signing the document.
Saunders v Anglia Building Society (1970)
A widow was to leave her house to her nephew in her will but when he needed to raise money she agreed to transfer title to him. But in fact the transfer was a dead of sale to Mr lee who latter mortgaged the house but defaulted on repayments. The HofL refused to issue the declaration of non est factum as she was not mistaken in the nature of the documentation only as to its legal effect.