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23 Cards in this Set
- Front
- Back
Common mistake 3 |
1Contract made properly, both parties share a mistake assumption 2 Normally it is to the benefit of one, who wishes to enforce 3 Courts normally seek to enforce contracts, so they are hard to void if consensus has been achieved |
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Effects 2 |
1 Void at common law 2 If it exists in equity, conditions can be put on it |
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Common mistake and frustration |
Frustration concerns subsequent event, common mistake concerns condition precedent |
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First step 2 |
1 See if contract allocates risk - heavy presumption 2 Hoffmann LJ, William Sindall v Cambridgeshire CC - no common mistake, did not want to disturb allocation of risk |
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If no allocation of risk 1 |
1 Orthodox view - exogenous doctrine of common mistake applies |
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Elements of common mistake 5 |
1 The Great Peace 2Common assumption 3 No warranty 4 Non-existence not caused by a party 5 Does not matter if assumption is fact or law |
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Criticism of common mistake 4 |
1 Others take the implied terms doctrine (like O'Sullivan and Hilliard) 2 Atiyah attacks common mistake - if no condition precedent, how do courts know to void the contract? 3 Australian court scathing in McRae v Commonwealth Disposals Commission when tried to argue contract void without ship 4 Normally one of the parties' faults |
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Statute 3 |
1 Sale of Goods Act 1979 S6 2 Contract void if goods perish 3 Atiyah says this should be abolished 4. Mistaken codification of Couturier principle 5 Assumes nobody has responsibility |
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Implied terms approach 4 |
1 Used by Toulson J, The Great Peace 2 Effect of mistake will depend on whether a term can be implied 3 Smith approves; no room for mistake 4 Smith: answer to be found in express or implied terms, if they do not cover it, contract is invalidated |
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Leading case on common mistake 4 |
1. William Sindall v Cambridgeshire CC 2. Unknown sewer beneath land 3 Property market crashed at the same time 4 Hoffmann LJ: without an express warranty, the law is caveat emptor - risk allocated to buyer |
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Morgan 3 |
1 No doctrine of common mistake 2 Bell v Lever Bros overruled 3 Contracts occasionally void for uncertainty |
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Mistake as to existence of subject matter 2 |
1 Subject matter of contract does not exist 2 Atiyah - one party normally to blame for this |
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Traditional case on existence of subject matter 4 |
1 Couturier v Hastie 2 Corn had deteriorated on voyage 3 In fact, not a doctrine of common mistake case - just interpreting contract 4 Found that buyer did not have to pay for goods that did not exist |
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Second case on existence of subject matter 2 |
1 McRae v Commonwealth Disposals Commission 2 Seller could not rely on common mistake if it was his fault the mistake was made |
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Third case on existence of subject matter 4 |
1 Associated Japanese Bank v Credit du Nord 2 Leaseback guarantee on transaction turned out to be fraudulent 3Contract void - not through mistake, but because that was what the parties agreed (implied or explicit condition precedent) 4 Smith: unilateral contract that was never fulfilled |
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Mistake as to quality 7 |
1. Courts have claimed this doctrine exists, but never applied it in practice 2. Originates in Bell v Lever Bros 3. Entered into a compensation agreement on the basis of a common mistake as to original employment contract 4 Chairman had been insider trading 5 Court found this did not void service agreement, he kept his money 6 Lord Atkin: sufficiently serious common mistake as to quality will void contract 7 Not satisfied on the facts |
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Reaction to Bell v Lever Bros 2 |
1 MacMillan: corruption of the law, Lord Atkin seduced by Pollack and subjectivist theories 2 Smith: even if doctrine exists, impossible that assumption as to quality will be sufficient to justify it on the facts |
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Main common mistake case 9 |
1 The Great Peace 2 Both parties chartered the ship when it was 400 miles away from where it thought it was 3 D then cancelled the contract, C sued for the hire 4 Court of Appeal: common mistake must make performance of the contract impossible 5 Here, performance was possible, and D had to pay the hire 6 O'Sullivan: CoA should have gone further and said mistakes always about construction, as opposed to quality 7 First instance Toulson J, approved by Morgan, on construction of contract - should have asked for warranty of location of ship 8 Tettenborn regrets the harshness - contract is not about performance in all circumstances, too harsh frustrates intentions 9 Lord Phillips MR: 'confusion in this area of our jurisprudence; |
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Fault of parties |
McRae v Commonwealth Disposals Commission - no common mistake if fault |
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Equitable doctrine of common mistake |
1 Suggestion that equity could make a contract voidable through common mistake if common law would not 2 Morgan: Lord Denning fought the law, the law won |
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Solle v Butcher |
1 Common assumption lease was not covered by the Rent Acts 2 Denning LJ: voidable in equity 3 Not be void at common law - claimant had made the innocent misrepresentation |
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The doctrine now
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1 Great Peace said Solle v Butcher was incompatible with Bell v Lever Bros and it could not overrule it 2 Could not overrule - two CoA - but said it was a matter of academic debate and (Lord Phillips MR) 'confusion in this area of our jurisprudence' 3 Mistake in Solle that was remedied was far less egregious than the one not remedied in Bell v Lever Bros 4 Aikens J, Lois Dreyfus v Statoil Energy Services - no such doctrine exists |
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Literal impossibility |
1 Maurice Kay LJ, Brennan v Bolt Burdon 2 Impossibility test means something must be literally impossible to perform |