No real agreement between the parties as they are at cross purposes. The claimant must prove that the parties were at such cross-purposes that a reasonable observer would not be able to say what the two parties had agreed.
The mistake must be a fundamental mistake of fact or law and must induce the parties into the contract.
Raffles v Wichelhaus (1864)
The defendant agreed to buy a cargo of cotton from P to arrive on the ship Peerless from Bombay. Unknown to the parties there were two ships called the Peerless sailing from Bombay one in October and the other in December, the parties meant different ships. A reasonable observer would not be able to say which ship they were referring to. Held the buyer was not bound to accept the December shipment, as the mistake was clearly fundamental.
In order to establish mutual mistake it has to be shown that there is such a degree of ambiguity that it is impossible on applying the objective test of a reasonable man, that the parties intended to be bound by one set of terms or the other. If on an objective view the parties could only come to a single common understanding of the terms of the contract then they will be bound by the contract despite the actual view of a party that he was mistaken by the terms.
Scriven Bros. v Hindley (1913)
Bales of hemp and tow were put up for auction (tow is of much lower quality), unusually they had the same markings on them. P id a price that was appropriate for hemp but it was in fact tow. Neither party was aware they were at cross-purposes. Objectively the court held the contract was void, as it was impossible to say that one or the other commodity was being contracted for.
However where one party is making a mistake as to quality of the subject matter then the mistake is not mutual.
Smith v Hughes (1871)
The defendant wanted to buy old oats P knew this but sold him new oats. There was no fraud nevertheless the defendant believed the oats he were buying were old. Held despite the mutual mistake the reasonable onlooker would conclude the parties were in agreement with what was being sold.
A contract Cannot be declared void merely because one of the parties discovers it is more disadvantageous than he believed it to be.