Having discovered this fact, the defendant refused to deliver. A majority of the court held that the parties had contracted on the understanding that that the cow was incapable of breeding. Accordingly, there had been a mistake not merely as to quality, but as to the very nature of the thing sold. It was thought that there was as much difference between an ox and a cow as there was between the animal the plaintiff bought and the one which both parties believed to be the subject matter of the contract. The difficulty with Sherwood v Walker when compared with the reasoning employed in Bell v Lever Bros is that the former looks suspiciously like a case in which the court has rectified what amounts to little more than a bad bargain. One way of viewing the difference between Sherwood and Bell is that the cases reveal a policy conflict in the way different judges approach the issue of risk allocation. On the one hand, there is a market-individualist approach to cases of mistake which seeks to uphold the sanctity of contracts and will therefore result in only the smallest number of cases in which the courts will upset a bargain on the ground of a shared mistake. On the other hand, there are cases in which the courts are more prepared to consider notions of fairness and justice in determining whether a mistake invalidates an agreement. It is not surprising that this alternative approach has developed in equity rather than at common law, as a simple glance at the form of relief granted in each case reveals a substantial difference. The common law answer in cases of shared fundamental mistake is that the contract is void ab initio – the contract is treated as if it never existed. In contrast, the equitable solution is to order rescission of the contract, but on terms that attempt to do justice between the parties. Thus, it is possible in equity to order rescission of the contract but then to add a rider to the effect that there should be a renegotiation of the contract on terms which take account of the fact in respect of which the parties were mistaken. In Solle v Butcher, the defendant leased to the plaintiff a flat. Both parties believed that the relevant property was not covered by the provisions of the Rent Restriction Acts, with the result that the defendant could charge a rent of £250 per annum. However, it later transpired that the relevant legislation was applicable with the result that the maximum rent payable was only £140. Such a mistake would not have been operative at common law, but the court held that the contract was voidable in equity, provided there was a fundamental mistake and no fault on the part of the person seeking relief: Solle v Butcher [1950] 1 KB 671, CA, p 690

doi:10.4324/9781843141518-128

Chapter

No Image Available

Chapter

Having discovered this fact, the defendant refused to deliver. A majority of the court held that the parties had contracted on the understanding that that the cow was incapable of breeding. Accordingly, there had been a mistake not merely as to quality, but as to the very nature of the thing sold. It was thought that there was as much difference between an ox and a cow as there was between the animal the plaintiff bought and the one which both parties believed to be the subject matter of the contract. The difficulty with Sherwood v Walker when compared with the reasoning employed in Bell v Lever Bros is that the former looks suspiciously like a case in which the court has rectified what amounts to little more than a bad bargain. One way of viewing the difference between Sherwood and Bell is that the cases reveal a policy conflict in the way different judges approach the issue of risk allocation. On the one hand, there is a market-individualist approach to cases of mistake which seeks to uphold the sanctity of contracts and will therefore result in only the smallest number of cases in which the courts will upset a bargain on the ground of a shared mistake. On the other hand, there are cases in which the courts are more prepared to consider notions of fairness and justice in determining whether a mistake invalidates an agreement. It is not surprising that this alternative approach has developed in equity rather than at common law, as a simple glance at the form of relief granted in each case reveals a substantial difference. The common law answer in cases of shared fundamental mistake is that the contract is void ab initio – the contract is treated as if it never existed. In contrast, the equitable solution is to order rescission of the contract, but on terms that attempt to do justice between the parties. Thus, it is possible in equity to order rescission of the contract but then to add a rider to the effect that there should be a renegotiation of the contract on terms which take account of the fact in respect of which the parties were mistaken. In Solle v Butcher, the defendant leased to the plaintiff a flat. Both parties believed that the relevant property was not covered by the provisions of the Rent Restriction Acts, with the result that the defendant could charge a rent of £250 per annum. However, it later transpired that the relevant legislation was applicable with the result that the maximum rent payable was only £140. Such a mistake would not have been operative at common law, but the court held that the contract was voidable in equity, provided there was a fundamental mistake and no fault on the part of the person seeking relief: Solle v Butcher [1950] 1 KB 671, CA, p 690

DOI link for Having discovered this fact, the defendant refused to deliver. A majority of the court held that the parties had contracted on the understanding that that the cow was incapable of breeding. Accordingly, there had been a mistake not merely as to quality, but as to the very nature of the thing sold. It was thought that there was as much difference between an ox and a cow as there was between the animal the plaintiff bought and the one which both parties believed to be the subject matter of the contract. The difficulty with Sherwood v Walker when compared with the reasoning employed in Bell v Lever Bros is that the former looks suspiciously like a case in which the court has rectified what amounts to little more than a bad bargain. One way of viewing the difference between Sherwood and Bell is that the cases reveal a policy conflict in the way different judges approach the issue of risk allocation. On the one hand, there is a market-individualist approach to cases of mistake which seeks to uphold the sanctity of contracts and will therefore result in only the smallest number of cases in which the courts will upset a bargain on the ground of a shared mistake. On the other hand, there are cases in which the courts are more prepared to consider notions of fairness and justice in determining whether a mistake invalidates an agreement. It is not surprising that this alternative approach has developed in equity rather than at common law, as a simple glance at the form of relief granted in each case reveals a substantial difference. The common law answer in cases of shared fundamental mistake is that the contract is void ab initio – the contract is treated as if it never existed. In contrast, the equitable solution is to order rescission of the contract, but on terms that attempt to do justice between the parties. Thus, it is possible in equity to order rescission of the contract but then to add a rider to the effect that there should be a renegotiation of the contract on terms which take account of the fact in respect of which the parties were mistaken. In Solle v Butcher, the defendant leased to the plaintiff a flat. Both parties believed that the relevant property was not covered by the provisions of the Rent Restriction Acts, with the result that the defendant could charge a rent of £250 per annum. However, it later transpired that the relevant legislation was applicable with the result that the maximum rent payable was only £140. Such a mistake would not have been operative at common law, but the court held that the contract was voidable in equity, provided there was a fundamental mistake and no fault on the part of the person seeking relief: Solle v Butcher [1950] 1 KB 671, CA, p 690

Having discovered this fact, the defendant refused to deliver. A majority of the court held that the parties had contracted on the understanding that that the cow was incapable of breeding. Accordingly, there had been a mistake not merely as to quality, but as to the very nature of the thing sold. It was thought that there was as much difference between an ox and a cow as there was between the animal the plaintiff bought and the one which both parties believed to be the subject matter of the contract. The difficulty with Sherwood v Walker when compared with the reasoning employed in Bell v Lever Bros is that the former looks suspiciously like a case in which the court has rectified what amounts to little more than a bad bargain. One way of viewing the difference between Sherwood and Bell is that the cases reveal a policy conflict in the way different judges approach the issue of risk allocation. On the one hand, there is a market-individualist approach to cases of mistake which seeks to uphold the sanctity of contracts and will therefore result in only the smallest number of cases in which the courts will upset a bargain on the ground of a shared mistake. On the other hand, there are cases in which the courts are more prepared to consider notions of fairness and justice in determining whether a mistake invalidates an agreement. It is not surprising that this alternative approach has developed in equity rather than at common law, as a simple glance at the form of relief granted in each case reveals a substantial difference. The common law answer in cases of shared fundamental mistake is that the contract is void ab initio – the contract is treated as if it never existed. In contrast, the equitable solution is to order rescission of the contract, but on terms that attempt to do justice between the parties. Thus, it is possible in equity to order rescission of the contract but then to add a rider to the effect that there should be a renegotiation of the contract on terms which take account of the fact in respect of which the parties were mistaken. In Solle v Butcher, the defendant leased to the plaintiff a flat. Both parties believed that the relevant property was not covered by the provisions of the Rent Restriction Acts, with the result that the defendant could charge a rent of £250 per annum. However, it later transpired that the relevant legislation was applicable with the result that the maximum rent payable was only £140. Such a mistake would not have been operative at common law, but the court held that the contract was voidable in equity, provided there was a fundamental mistake and no fault on the part of the person seeking relief: Solle v Butcher [1950] 1 KB 671, CA, p 690

ABSTRACT

Let me first consider mistakes which render a contract a nullity. All previous decisions on this subject must now be read in the light of Bell v Lever Bros Ltd. (The correct interpretation of that case, to my mind, is that, once a contract has been made, that is to say, once the parties, whatever their inmost states of mind, have to all outward appearances agreed with sufficient certainty in the same terms on the same subject matter, then the contract is good unless and until it is set aside for failure of some condition on which the existence of the contract depends, or for fraud, or on some equitable ground. Neither party can rely on his own mistake to say it was a nullity.) From the beginning, no matter that it was a mistake which to his mind was fundamental, and no matter that the other party knew that he was under a mistake. A fortiori, if the other party did not know of the mistake, but shared it. The cases where goods have perished at the time of sale, or belong to the buyer, are really contracts which are not void for mistake but are void by reason of an implied condition precedent, because the contract proceeded on the basic assumption that it was possible of performance. So far as cases later than Bell v Lever Bros Ltd are concerned, I do not think that Sowler v Potter can stand with King’s Norton Metal Co Ltd v Edridge, which shows that the doctrine of French law as enunciated by Pothier is no part of English law. Nor do I think that the contract in Nicholson and Venn v Smith-Marriot, was void from the beginning.