Unilateral Contract in UK Law

Although there has been some discussion in the authorities about the principles involved, there has hitherto been no real doubt that under English law a party to a contract may effectively give consent in the contract itself to a subsequent novation.

What is relevant in such a case is the subjective intention of the settlor. Although, as I have said, there is no legal requirement of an outward expression or objective communication of the settlor's intention in such a case, it will plainly be difficult as a matter of evidence to discharge the burden of proving that there was a mistake in the absence of an outward expression of intention.

The general rule at common law is that if one party has made a mistake as to the terms of the contract and that mistake is known to the other party, then the contract is not binding. The reasoning is that although the parties appear, objectively, to have agreed terms, it is clear that they are not in agreement. Some of the cases talk of such a contract being “void”, but I think it is clearer to say that there was never a contract at all.

None of the cases he cites at paragraph 455 of his judgment is authority for the existence of that jurisdiction. If there is no such jurisdiction in the case of a common mistake, I fear I am unable to see how, in logic, one can devise a rationale for an equitable jurisdiction in the case of a unilateral mistake, at least where there has been no misrepresentation by the other party.

In all the various formulations of the relevant principle in the judgments in those cases, none of the members of the respective courts suggested that rectification can properly be granted on account of unilateral mistake unless the defendant had actual knowledgeof the existence of the plaintiff's mistake at the time when the contract was signed.

There may conceivably be a different legal result where the repudiation is oblique and arises indirectly as, for example, where the employer seeks to change the nature of the work required to be done or the times of employment; but I cannot see how the undertaking to employ on the one hand, and the undertaking to serve on the other can survive an out-and-out dismissal by the employer or a complete and intended withdrawal of his service by the employee.