MISTAKE

 MISTAKE

n Definition

-Mistake generally arises in  situation where if both parties to an agreement enter into it under some misunderstanding or misapprehension, in certain circumstances the law will permit them to allege   that the contract is defective , on the ground that if they had known the true facts , they would never have entered into the agreement.

 

n Types of mistake

-Unilateral mistake where there is some mistake or misunderstanding in the communications between the parties which prevents there being an effective agreement, for instance one party in an offer states terms which the other party knows the first party does not intend.

-Mutual mistake is when only one of the parties is mistaken. The other knows, or must be taken to know, of his mistake.

 

n A mistake of fact made by both parties

-mistake as to the existence of the subject matter of the agreement (Galloway v Galloway)

- mistake as to the identity of the subject matter (Falck v Williams)

-mistake as to the quality of the subject matter (Smith v Hughes)

-mistake as to the possibility of performing the agreement (Sheikh Bros Ltd v Ochsner)

- mistake as to quantity

 

n Contract made inter absentes

-Where the parties are not physically in each others presence, for example they are dealing by correspondence, and one party is mistaken as to the identity, not the attributes, of the other and intends instead to deal with some identifiable third party, and the other knows this, then the contract will be void for mistake.

-Cundy v Lindsay & King's Norton Metal Co Ltd v Edridge Merrett Co Ltd

 

n Contract made inter praesentes

-Where the parties are inter praesentes (face to face) there is a presumption that the mistaken party intends to deal with the other person who is physically present and identifiable by sight and sound, irrespective of the identity which one or other may assume.

-Phillips v Brooks where the plaintiff intended to contract with North although he would not have made the contract, but for the defendant's fraudulent misrepresentation, and therefore, the property in the ring passed to North who could give a good title to any third party acquiring it bona fide, without notice and for value, and the action failed.

 

n Effect and remedy

-For the effect, in Section 21 stated that the agreement is viod. On the other hand, in Section 23 stated that the agreement is valid.

-For the remedy, the rectification of a written document was said in Section 30 of SRA.

 

n Mistake as to law

-In Section 22 was stated that the contract is valid. For instance, the mistake as to the law in Malaysia in contract not voidable.

-Mistake with regards to foreign law will be treated as a matter of fact, ie whether it is essential to the agreement.