Cases of Mistake

BELL V LEVER BROS (1932) AC 161

Facts: Lever Bros appointed the two defendants to run a second company, Niger. Their employment
contracts were said to last 5 years. However, the Niger company was not doing well so Lever Bros
decided to merge Niger with another company thus making the defendants redundant. Lever Bros
created a contract which would mean each defendant got £50,000 if they agreed to end their contract -
this was accepted. It was later discovered the defendants had made a serious breach of duty when
working at Niger where their contracts could have been ended without compensation. Lever Bros
claimed there was mistake as there was no legal obligation for them to pay compensation to the
defendants so the contract of £50,0000 should be void

Held: Lord Atkin said that it had to be “the mistake of both parties” and a mistake about the “existence
of some quality” which made the contract different to the one intended. Therefore, there is no operative
mistake because Lever Bros got exactly what they wanted (i.e. the defendants ending the contract) and
the fact this could have been done without Lever Bros paying compensation to the defendants DOES
NOT MATTER

COOPER V PHIBBS (1867) UKHL 1

Facts: A nephew leased a fishery from his uncle. His uncle died. When the lease came up for renewal the
nephew renewed the lease from his aunt. It later transpired that the uncle had given the nephew a life
tenancy in his will. The lease was held to be voidable for mistake as the nephew was already had a
beneficial ownership right in the fishery.

Held: This is an instance of res sua. Normally where a contract is found to have been entered under a
common mistake the contract will be rendered void as oppose to voidable. The lease was held to be
voidable rather than void as the claim was based in equity as it related to beneficial ownership as oppose
to legal ownership

COUTURIER V HASTIE (1856) 5 HLC 673

Facts: A cargo of corn was in transit being shipped from the Mediterranean to England. The owner of the
cargo sold the corn to a buyer in London. The cargo had however, perished and been disposed of before
the contract was made. The seller sought to enforce payment for the goods on the grounds that the
purchaser had attained title to the goods and therefore bore the risk of the goods being damaged, lost or
stolen.
Held: The court held that the contract was void because the subject matter of the contract did not exist
at the time the contract was made

CUNDY V LINDSAY (1878) 3 APP CAS 459

Facts: A rogue bought linen handerkchiefs from Cundy, writing to him pretending to be a famous
business. They then sold the rogue the handkerchieds and the rogue immediately sold them to Lindsay
(the defendant). Cundy sued Lindsay for the tort of convergence

Held: The court considered the right of ownership to the handkerchiefs. In this case, the contract was
void so the rogue had no title to pass ownership of the property onwards: if a contract is void for
mistake, then, the property will be given back to the original owner according to this case

DENNY V HANCOCK (1870) 6 CH APP 1

Facts: The defendant was interested in buying land and he actually went on site to see exactly what the
land looked like. The land was divided from the next plot by an iron fence. The problem was that there
were shrubs hiding the iron fence so he thought the property included 3 enormous trees, but this was
not the case even though the plans were clear. So when he bought the land and found it was not as big
as he thought so he wanted contract set aside for mistake.

Held: The contract was not set aside for mistake - the buyer had placed himself in a position to make a
mistake. Court held there was no force to make the sale go ahead and allowed damages. So although
mistake was not available, damages were available. So if a unilateral mistake does not deem a contract
void, equitable relief may be available

GALLOWAY V GALLOWAY (1914) 30 TLR 531

Facts: Both parties under assumption that they were married to each other, made a separation
agreement. It was later discovered that the current marriage was invalid because against all odds, the
husband’s former wife was still alive

Held: In this case a separation agreement was void because it was entered in the mistaken belief thatthe
parties were married to each other and therefore needed a formal separation. However, ittranspired that
the husband's previous spouse was still alive

HARTOG V COLIN & SHIELDS [1939] 3 ALL ER 566

Facts: Contract law does not usually intervene in circumstances where one party is more knowledgeable
than the other, but did in this case. The parties negotiating for the sale of hare skin which was to be
bought by the plaintiff (i.e. claimant). The defendant, when they quoted the price, instead of quoting a
price per skin he quoted a price per pound and as a result the prize was about a third cheaper than what
it would really be. Mistake was discovered so it was pleaded

Held: Court agreed the contract was invalid for mistake because the price was so much smaller than
what it would usually be in this particular trade

INGRAM V LITTLE [1961] 1 QB 31

Facts: The Ingram sisters were swindled by a rogue who wanted to buy their car, but the contract was
made face to face. The rogue had stolen a cheque book.

Held: The court said it was void for mistake (although face to face) – case has not been overruled but has
been severely criticised!

JOSCELYNE V NISSEN [1970] 2 QB 86

Facts: A father gave a daughter his business in return for her paying the bills to his house. However, the
contract did not express this ‘common continuing intention’

Held: The court could rectify this contract to put in this common continuing intention as there was
sufficient proof of her father’s intention