Bell v Lever Bros - Contract Law PDF

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Bell v Lever Bros. (1932) AC 161 judgement: Facts: Mr Bell was the managing director for five years of a company that was owned by Lever Bros Ltd. Mr Bell had traded for personal profit during his employment, which was contract to his contract with the company. Without knowledge of this, Lever Bros Ltd made an offer of redundancy to Mr Bell, terminating his contract and offering a £30,000 payment as compensation Issues: the main issue was whether the redundancy contract that was created and accepted by Mr Bell, could be void by common mistake, due to later finding out about his personal trading. Lever Bros Ltd argued that this concealment and misconduct was a breach of his duty that was detailed in his employment contract. Held: the court held that the contract was not void, as the mistake was not an ‘essential and integral’ part of the contract. The personal trading that had happened during the employment was not related to the subject matter of the contract and was said to be minor compared to the profits Mr Bell made for Lever Bros Ltd. Only a mistake to the identity of the parties or of subject matter to the contract, as well as an item’s quality, would be able to successfully negate consent and therefore void a contract, as if it had never existed. The mistake must be essential to the identity of the contract. ‘How temptation led to mistake’: an explanation of Bell v. Lever Bros, (2003) 119 LQR 625’. Main arguments: What is meant by fundamental breach? Facts/ judgements:

QUESTION: “In Bell v. Lever Bros. Ltd. (HL 1932), the House of lords held (by a 3:2 majority) that, for a mistake made by both parties at the time of entering into a contract to justify the court setting the contract aside, the mistake must be about “an essential and integral element of the subject-matter of the contract”. In what circumstances may this be the case? May the standard have been set too high?”...