COLLEGE OF THE
UNIVERSITY OF THE
1. INTRODUCTION
We will seek to determine the effect of mistake on the validity of contracts, both at
law and in equity. At common law, the effect of a legally operative or fundamental
mistake is to render a contract void ab initio. Accordingly, once such a mistake is
found to be fundamental enough to nullify a contract, then property cannot pass und-
er it nor does any legally binding obligations arise under it. However, in equity a
contract affected by a fundamental mistake may be voidable, i.e. valid unless avoided
by the party having the right to avoid it. Such avoidance must take place before pro-
perty has passed to an innocent third party. There are also other bars to the rescission
of a voidable
contract. IT MUST ALSO BE NOTED THAT,
IN ACCORDANCE
WITH THE
MODERN CONSTRUCTIONIST APPROACH, THAT MISTA-
KE WILL NOT
OPERATE IF THE PARTIES HAVE ALLOCATED THE
RISK OF THE MISTAKE.
2. CATEGORISATIONS
a. Mistakes are generally classified as common, mutual or unilateral.
b. They
can also be classified as mistakes which vitiate, i.e. negative or nullify,
consent and mistakes which do not. In
the leading case of
c. One jurisprudential question which arises here is: what is the basis of the court’s
jurisdiction for nullifying contracts which the parties have fully agreed to and,
therefore, no issue of lack of consent arises?
3. RELATIONSHIP TO OTHER AREAS OF LAW
a. EQUITY - Equity plays a very significant role in this area of law. Essentially, the
only relief that one can seek, if one fails to get a remedy at common law,
is through equity whose purpose is to mitigate the rigour of the common
law. But note, that even equity has its own rules or conditions which
you must comply with before you can receive its aid. NOTE ALSO
THAT EQUITY FOLLOWS THE LAW,
WHICH IN THIS CON-
TEXT MEANS THAT IF A CONTRACT IS VOID AT COMMON
LAW, THEN ONE CANNOT GET ANY EQUITABLE RELIEF.
b. JURISPRUDENCE – One central jurisprudential question deals with the moral val-
validity of the Court’s rationale for overruling or upsetting
the sanctity of bargains or agreements which are freely ente-
red into.
- Another important jurisprudential question is what is the basis (practical morality or positive law) for the court’s
assumed authority to imply terms in contracts generally?
- Yet another serious question which is raised here for juris-
prudential consideration is why does the legal effect of a
fundamental mistake result in a contract being rendered VOID AND NOT VOIDABLE. In this regard, Lord Denning was of the view that the concept of nullity or voidness, in this context, was no part of English law, but was only supported “by a reference to the French jurist Pothier: see per Lord Denning MR in Lewis v. Averay[1971] 3 All ER 907.
4. CASES
1. Bell v. Lever Bros (1932) AC 161;
2. Sheikh Bros Ltd v. Ochsner (1957) AC 136;
3. Associate Japanese Bank (International) Ltd v. Credit du Nord (1988) 3 All.E.R 902;
4. Amalgamated Investment and Property Co. Ltd v. Walker & Sons Ltd (1976) 3 All.E.R 509;
5. Peco Arts Inc. v. Hazlitt Gallery (1983) 3 All.E.R. 193;
6. Scott v. Coulson (1903) 2 Ch. 249;
7. Galloway v. Galloway (1914) 30 T.L.R. 531;
8. Griffiths v. Brymer (1903) 19 T.L.R. 434;
9. Norwich Union Fire Insurance Society v. Price (1934) AC 455;
10. Kennedy v. Panama Royal Mail Co. (1867) L.R. 2 Q.B. 580;
11. Smith v. Hughes (1871) L.R. 6 Q.B. 597;
12. Harrison & Jones Ltd v. Bunten & Lancaster Ltd (1953) 1 Q.B. 646;
13. Leaf v. International Galleries (1950) 1 All.E.R. 693;
14. Solle v. Butcher (1959) 2 All.E.R. 1107;
15. Gompertz v. Bartlett (1853) 2 E & B 849;
16. Courturier v. Hastie (1856) H.L.C. 673;
17. Strickland v. Turner (1852) 7 Exch. 208;
18. Hitchcock v. Giddings (1817) 4 Price 135; 146 E.R. 418;
19. Barrow, Lane & Ballard Ltd v. Phillips & Co. (1929) 1 K.B. 574;
20. McCrae v. Commonwealth Disposals Commission (1951) 84 C.L.R. 377;
21. Cooper v. Phibbs (1867) L.R. 2 H.L. 149;
22. Raffles v. Wichelaus (1864) 2 H & C 906; 159 E.R. 375;
23. Falck v Williams (1900) A.C. 176;
24. Scriven Bros & Co. v. Hindley & Co. (1913) 3 K.B. 564;
25. Hartog v. Colin Shields (1939) 3 All.E.R. 566.
5. REFERENCES
- Anson’s Law of Contract (27th edn., 1998) at pages 299-311;
- Smith & Thomas, ‘A Casebook on Contract Law’ ( 10th edn., 1996 ) at pages 125-128, 342-344; 486-498 and 501-506;
- The Role of Mistake in the Law of Contract by Calvin Eversley, December 1998 UWI Caribbean Law Review, Vol 8, No. 2., at pages 275-286.
6. TUTORIAL QUESTION
Discuss the various legal and jurisprudential issues in
the House of Lords’ decision of Bell v. Lever Bros.
Lecturer: Calvin A. Eversley, Esq.[1]
LL.M (Harvard), LL.B (Hons),
L.E.C., D.P.A (Distinction)
Attorney & Counsellor-at-law
(US Third Circuit Court of Appeal,
New York, Guyana, Barbados)
Copyright © by Calvin A.Eversley 2002
[1] IN
RENDERING UNTO CAESAR THE THINGS THAT ARE CAESAR’S AND UNTO GOD THE THINGS THAT
ARE GOD’S, I HEREBY ACKNOWLEDGE AND GIVE CREDIT TO ALL THOSE PERSONS WHOSE
SOURCES I HAVE SPECIFICALLY USED HEREIN.
HOWEVER, WITH RESPECT TO MY OWN INPUT, INCLUDING MY UNDERSTANDING AND
THE EXPRESSION OF MY UNDERSTANDING WHICH I HAVE RECEIVED FROM THE LORD, I
HEREBY FREELY AND JOYFULLY GIVE ALL HONOUR, ALL PRAISE AND ALL GLORY TO MY MOST
GLORIOUS HEAVENLY FATHER IN AND THROUGH MY MOST BLESSED LORD AND SAVIOUR JESUS
CHRIST.