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COMMON MISTAKE IN CONTRACT: RARE SUCCESS AND COMMON MISAPPREHENSIONS

Published online by Cambridge University Press:  08 November 2018

Jonathan Morgan
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Abstract

Disputes involving shared mistakes should be resolved by considering the meaning (explicit and implicit) of the parties’ agreement. There is no room for a free-standing doctrine of mistake. The argument is illustrated by considering three recent decisions on common mistake.

Keywords

contractcommon mistakeimplied terms
Type
Articles
Information
The Cambridge Law Journal , Volume 77 , Issue 3 , November 2018 , pp. 559 - 569
Copyright
Copyright © Cambridge Law Journal and Contributors 2018 

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Footnotes

*

Senior University Lecturer in Law, University of Cambridge.

References

1 National Carriers Ltd. v Panalpina (Northern) Ltd. [1981] A.C. 675, 688.

2 Birks, P.B.H., The Roman Law of Obligations, Descheemaeker, E. (ed.) (Oxford 2014), 76–77CrossRefGoogle Scholar.

3 Ibid., at p. 77.

4 Civilian law was influentially relied upon by Blackburn J. in Kennedy v Panama, New Zealand & Australian Royal Mail Co. (1867) L.R. 2 Q.B. 580. See Cartwright, J., “The Rise and Fall of Mistake in the English Law of Contract” in Sefton-Green, R. (ed.), Mistake, Fraud and Duties to Inform in European Contract Law (Cambridge 2005), 67–73Google Scholar.

5 D.18.1.9.2 (Ulpian).

6 H.M.S. London [1914] P. 72, 78, per Evans P., quoting Sir F. Pollock (causation). See also e.g. Benham v Gambling [1941] A.C. 157, 166, per Viscount Simon L.C. (damages for loss of expectation of life).

7 Associated Japanese Bank (International) Ltd. v Credit Du Nord S.A. [1989] 1 W.L.R. 255, 263, per Steyn J.

8 Smith v Littlewoods Organisation Ltd. [1987] A.C. 241, 280.

9 See Cartwright, “The Rise and Fall of Mistake”, pp. 67–73, 81, 84.

10 Unconscionable conduct might justify (equitable) relief for mistake. But there seems no good justification for an equitable discretion to avoid contracts in the absence of such impropriety: cf. Solle v Butcher [1950] 1 K.B. 671.

11 This was also Denning L.J.’s view of mistake at common law: ibid., at p. 691 (res extincta cases 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” (emphasis added)).

12 Great Peace Shipping Ltd. v Tsavliris Salvage (International) Ltd. [2002] EWCA Civ 1407, [2003] Q.B. 679, at [70], [73].

13 Davis Contractors Ltd. v Fareham Urban District Council [1956] A.C. 696, 728, per Lord Radcliffe.

14 Attorney General of Belize v Belize Telecom Ltd. [2009] UKPC 10, [2009] 1 W.L.R. 1988, at [25].

15 A. Kramer, “Implication in Fact as an Instance of Contractual Interpretation” [2004] C.L.J. 384.

16 Marks and Spencer plc. v BNP Paribas Securities Services Trust [2015] UKSC 72, [2016] A.C. 742.

17 For criticism of Lord Neuberger's criticism, see McCunn, J., “Belize It or Not: Implied Contract Terms in Marks and Spencer v BNP Paribas” (2016) 79 M.L.R. 1090CrossRefGoogle Scholar.

18 Belize Telecom [2009] UKPC 10, [2009] 1 W.L.R. 1988, at [17].

19 Cf. EIC Services Ltd. v Phipps [2003] EWHC 1507 (Ch), [2003] 1 W.L.R. 2360, at [178], per Neuberger J. holding the “officious bystander” test useful to demonstrate the uncommerciality of a common mistake plea, notwithstanding rejection of the implied term approach in Great Peace [2002] EWCA Civ 1407, [2003] Q.B. 679 (reversed on the facts: [2004] EWCA Civ 1069, [2005] 1 W.L.R. 1377).

20 Philips Electronique Grand Public S.A. v British Sky Broadcasting Ltd. [1995] EMLR 472, 481, per Bingham M.R.

21 [2018] EWHC 1348 (Comm) (“Triple Seven”).

22 Ibid., at para. [70].

23 Ibid., at paras. [70], [72].

24 Ibid., at paras. [69]–[70].

25 Ibid., at paras. [64]–[65] citing Apvodedo NV v Collins [2008] EWHC 775 (Ch), at [43].

26 Ibid., at paras. [66], [69].

27 Ibid., at para. [83](4).

28 Ibid., at para. [89].

29 Ibid., at para. [89](1).

30 Shirlaw v Southern Foundries (1926) Ltd. [1939] 2 K.B. 206, 227, per Mackinnon L.J.; cf. EIC Services Ltd. [2003] EWHC 1507 (Ch), [2003] 1 W.L.R. 2360.

31 Amalgamated Investment & Property Co. Ltd. v John Walker & Sons Ltd. [1977] 1 W.L.R. 164Google Scholar.

32 E.g. Aquila Wsa Aviation Oppurtunities II Ltd. v Onur Air Tasimacilik AS [2018] EWHC 519 (Comm), at [66], per Cockerill J.

33 Triple Seven, at [91].

34 Dana Gas P.J.S.C. v Dana Gas Sukuk Ltd. [2017] EWHC 2928 (Comm), [2018] 1 Lloyd's Rep. 177 (“Dana Gas”).

35 [1989] 1 W.L.R. 255, 268 (see also Great Peace [2002] EWCA Civ 1407, [2003] Q.B. 679, at [75]).

36 Dana Gas, at [54].

37 Ibid., at paras. [57]–[78].

38 Ibid., at para. [64].

39 Ibid. (N.B. Leggatt J. was discussing Lord Atkin's example of sale of a supposed “old master painting”: Bell v Lever Bros [1932] A.C. 161, 224). See further William Sindall plc. v Cambridgeshire County Council [1994] 1 W.L.R. 1016, 1035Google Scholar, per Hoffmann L.J.

40 British Red Cross v Werry [2017] EWHC 875 (Ch).

41 Ibid., at paras. [21]–[22].

42 Slade, C.J., “The Myth of Mistake in the English Law of Contract” (1954) 70 L.Q.R. 385Google Scholar.

43 Cf. Cartwright, “The Rise and Fall of Mistake” (noting the commercial context for the confinement of common mistake, and wondering whether it could ever enjoy a renaissance in non-commercial cases).

44 For unconscionable mistakes cf. n.10 above.

45 E.g. Hirji Mulji v Cheong Yue Steamship Co. Ltd. [1926] A.C. 497, 510, per Lord Sumner; J. Lauritzen AS v Wijsmuller B.V. (The Super Servant Two) [1990] 1 Lloyd's Rep. 1, 8, per Bingham L.J.

46 Smith, J.C., “Contracts – Mistake, Frustration and Implied Terms” (1994) 110 L.Q.R. 400Google Scholar.

47 Taylor v Caldwell (1863) 3 B. & S. 826. For a very similar approach to mistake, see Pope v Buenos Ayres New Gas Co. (1892) 8 T.L.R. 758, 759Google Scholar, per Lindley L.J.; Solle [1950] 1 K.B. 671.

48 Tettenborn, A., “Agreements, Common Mistake and the Purpose of Contract” (2011) 27 J.C.L. 91Google Scholar.

49 (1954) 70 L.Q.R. 385, 401. See also Cartwright, “The Rise and Fall of Mistake”.

50 MacMillan, C., Mistakes in Contract Law (Hart 2010)Google Scholar.

51 See further Pope (1892) 8 T.L.R. 758.