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Mistake
Mistake in contract can be broken down to into the following four categories:
1. Common Mistakes
2. Unilateral Mistakes
3. Mutual Mistakes
4. Mistakes relating to Identity
Common Mistakes
In the situation of a common mistake the parties are in agreement with each other but have
entered into the contract upon the same misapprehension, i.e. they have both relied on the
mistake when entering into the contract. In the case of a common mistake which goes right
to the root of the contract this will result in the contract being void as the mistake was
fundamental to the contract.
The following common mistakes will cause the contract to become void:
Mistake in relation to the existence of the subject matter where the subject matter
of the contract does not exist of ceases to exist the contract will be void at common
law
Mistake in relation to the title in the case where the contract is to transfer property
from one person to another but the second person in fact already owns the property
but neither party was aware of this the contract will be void at common law
What is the case concerning a mistake in relation to the quality of the subject
matter of a contract?
If the mistake is in relation to the quality of the subject matter of the contract then the
contract will still be valid at common law. An example of this is a contract between two
people for the sale of a painting where both parties believed the painting to be painted by a
particular artist. The fact that there was a mistake in relation to the artist would not make
the contract void at common law.
The only way a contract will be void due to a mistake in relation to the quality of the subject
matter if the quality of the goods was fundamental to the contract.
Unilateral Mistakes
A unilateral mistake is where one party is mistaken while the other party is aware of
this mistake and takes advantage of it when forming the contract. A unilateral
mistake of this manner will eliminate the consent required for the proper formation
of a contract meaning that there is no contract in existence.
In order for a contract to be void due to a unilateral mistake the mistake must relate
to the terms and conditions of the contract. A unilateral mistake in relation to the
quality of the subject matter of a contract will not result in the contract being void.
It is not enough for one party simply to be mistaken in relation to the terms and
conditions of a contract. For the contract to be void due to the unilateral mistake the
other party must have been aware of this mistake and then used it to their
advantage in forming the contract.
Mutual Mistakes
If the mutual mistake relates to the identity of the subject matter the contract will be
held to be void. If the mutual mistake relates to the quality of the subject matter
the contract is unlikely to be held to be void.
A contract will become void at common law where a mistake was made in relation to
the identity of the other party with whom the contract is made and that the identity
of that person is central to the formation of the contract.
This is difficult to prove as a lot of the time when forming a contract the parties will
meet in person. When this is the case there is a presumption that you have intended
to do business with the person in their presence making it very difficult for the
contract to be deemed void.