Mistake problem question ( Usain) PDF

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Nawal AbbasyQuestion:Answer Skeleton‣ Introduction:Mistake is a vitiating factor in the formation of a contract. The question scenario requires a discussion mistake. Mistake of fact occurs when one (unilateral) or both (bilateral) parties in a contract have mistaken a term that is essential to the m...

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Nawal Abbasy ! Question: !

! Usain inherits two chairs from his grandfather. They look almost identical but one of them is antique and is worth £5000. Usain doesn’t like the chairs very much and decides to sell them. ! Valda hears that Usain has chairs for sale and pays him a visit. Valda offers him £500 for one of the chairs and Usain accepts. Some time later, Usain discovers that he has sold the antique chair and seeks to recover it from Valda on the grounds of his mistake. ! Using case law to support your answer, analyse the rules relating to mistake and breach of contract and advise Usain as to any consequent remedy that he might realistically pursue against Valda.

Answer Skeleton ‣ Introduction: !!Mistake is a vitiating factor in the formation of a contract. The question scenario requires a discussion mistake. Mistake of fact occurs when one (unilateral) or both (bilateral) parties in a" contract"have mistaken a term that is essential to the meaning of the contract. ‣ List all the legal issues: 1. 2. 3.

Is Usain mistake as to the quality of the chair a unilateral or bilateral mistake? Whether Usain’s claim for mistake will be operative at common law? Whether Usain claim can be operative at equity?

‣ First legal issue (use as many paragraphs as you like): Issue: ➡ Is Usain mistake as to the quality of the chair a unilateral or bilateral mistake?

Law: ➡ Define Unilateral mistake (Smith v Hughes) ➡ Define Bilateral mistake. ➡ Mention"briefly"the two type of bilateral mistake:

A. COMMON MISTAKE: both parties are mistaken about the same thing which is critical element of their agreement (Bell v Lever Bros). 1

Nawal Abbasy B. CROSS PURPOSE MISTAKE: (Raffles v Wichelhaus (1864))!

Analysis: ! As in the present case both the parties are mistaken as to the quality of the subject matter (chair), this mistake will be a bilateral mistake. Bilateral mistakes are mostly operative to make the contract void. In Bell v Lever Brothers (1931), Lord Atkin stated that when mistake operates upon a contract, it does so to negative or nullify the consent of the parties. Here Usain and Valda are both mistaken about the same thing and not as to two different things. Usain thought that the chair was an ordinary one and so did Valda. Both parties were unaware about the antique quality of the chair.

Conclusion Just as Bell v Lever Bros, Usain and Valda are mutually mistaken as to the quality of the chair (Common mistake). This mistake is a a mistake as to fact.

‣ Second legal issue: Issue: ! Whether Usain’s claim for mistake will be operative at common law? Law ➡ Both parties are mistaken about the same thing which is critical element of their agreement. ➡ A mistake of both parties is sufficiently fundamental to invalidate the apparent contract ➡ It is difficult to make a mistake as to quality of the subject matter operative at common law. ➡ Mention the facts and decision of Bell v Lever Bros. ➡ The test established by Lord Atkin in Beller v Lever Bros to render a contract void for mistake: “Mistake as to quality of the thing contracted for raises more difficult questions. In such a case mistake will not affect assent unless it is the mistake of both parties, and is to the existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be”. ➡ Lord Styen in Associated Japanese Bank (International) Ltd v Credit du Nord SA (1988), stated that the doctrine of mistake at common law had a narrow ambit – and one into which few cases had fallen. ➡ Mention the facts and decision of Leaf v International Galleries. Analysis: Applying Lord Atkin’s test in Bell v Lever bros, Usain and Valda were unwary of the antique nature of the chairs. Usain believed that he is selling a chair and Valda believed that she is buying a chair. Therefore, it was not essentially different from what they believed it to be (“a chair”). The antique nature of the chair was not sufficiently fundamental at the time they entered into a contract.

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Nawal Abbasy

Conclusion: Very few contracts are found to be void on the ground that there is a sufficiently fundamental mistake as to quality. Based on the reasoning of Beller v lever Bros, Usain’s claim will fail at common law because the mistake not essentially different from what they believed it to be (“a chair”).

‣ Third legal issue: Issue ➡ Whether Usain claim can be operative at equity? Law: ➡ Where common law does not make a mistake operative, equity may make that mistake operative to render the contract voidable instead of void. ➡ Mention the facts and decision of Solle v Butcher ➡ Lord Denning in Solle v Butcher said that the House of Lords was only concerned with common mistake at common law and not at equity. ➡ Solle v Butcher was disapproved in The Great Peace. ➡ Mention the facts and decision of The Great Peace. ➡ In Pitt v Holt (2013), the Supreme Court stated that The Great Peace had ‘effectively overruled’ Solle v Butcher.

Analyse: ! In The Great Peace, Lord Phillips MR, appears to have made the relevant criteria for an operative mistake as to quality of the subject matter even more demanding than Lord Atkin in Bell v Lever Bros. If Solle v Butcher would ave been good law, Usain’s claim for mistake would have been operative to render the contract voidable. However, based on the reasoning of The Great Peace, as at common law Usain and Valda’s mistake did not render the contract essentially different from what they believed it to be, equity will also not render their contract voidable, if it is not void at common law. As Usain did not know about the antique nature of the chair he was only intending to sell an ordinary chair. His intention was not to gain profits from the antique chair. Similarly Valda did intend to buy an antique chair. Therefore, the court will be more inclined to protect the innocent buyer rather than favouring the seller in recovering losses following a bad bargain.

Conclusion: The courts will not allow Usain to treat the contract at an end and claim the chair back from Valda. His mistake is non operative at law (Bell v Lever Bros) and equity (The Great Peace)

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