A New Approach To Mistake In Contract

DOIhttp://doi.org/10.1111/j.1468-2230.1965.tb01068.x
AuthorSamuel Stoljar
Publication Date01 May 1965
THE
MODERN LAW REVIEW
Volume
28
May
1965
No.
3
A
NEiV
APPROACH
TO
MISTAKE
IN
CONTRACT
I.
INTRODUCTORY
To
return to contractual mistake demands more than the customary
apology. Too much has been said to add just another comment on
this
or
that aspect
or
yet another criticism of some earlier view.‘
This does not mean that the law is in
a
fit
state to be left alone
or
that nothing new should be tried. Indeed there is still every need
for an approach which, rather than particular
or
selective, tries to
go to the roots of things, thus also tries for
a
more general theory:
a
theory (that is) that can more simply explain
or
realign the cases,
and that can do this in terms of a few organising themes that cut
across the whole field, including mistake
of
subject-matter and
identity, and mistake
in
equity and common law.
Such a theory would need to introduce a major distinction which
in turn derives from an important ambiguity in the meaning
of
mistake. The ambiguity arises because we use the word in, so
to
speak, an active and passive sense: in an active sense as when
we say
I
unthinkingly wrote down Peter
for
Paul,” and
in
a
more passive sense in a statement as
Yes,
I
gave the wrong answer
because
I
didn’t know.” The point of this distinction
is
not in its
grammar but in what it implies. In the active example the implica-
tion is that the speaker knew the true facts all along,
so
that his
mistake amounts to little more than
a
mere oversight, while in the
passive example it is implied that the speaker knew nothing, hence
remained ignorant until the final moment of truth.
A
very similar
distinction reappears in the context of contractual mistake.
For
in advancing mistake as a ground for avoiding contractual liability,
a person may say one
of
two things. He may say, in the first place,
that the contract now confronting him
is
not his agreement in fact in
1
The numerous, often highly polemical, views
on
mistake are
now
substantially
listed in Anson’s
Law
of
Contract,
21st ed. (1959), pp. 240, 259; and Cheshire
and Fifoot,
The
Lam
of
Contract,
6th
ed. (1964),
pp.
188.
189, while for the
American material see Palmer,
Mistake and Unjustified Enrichment
(Ohio
(1962),
p.
99
and
prrssint.
VOL.
28
265
10
266
THE
MODERN
LAW
REVIEW
VOL.
28
that it does not correspond with what was, and is, the parties’ true
contractual intent. Clearly, to recognise such a mistake, which
we shall call correspondence-mistake, is simply to recognise the
principle of freedom of contract
or
autonomy of choice, that is, the
principle that a person is free to select his contractual subject-
matter
or
contracting party, provided (and this is the vital limita-
tion)
it
is strictly shown that this freedom is exercised before, not
after, the bargain is made. A person may say, secondly, that the
contract confronting him contains liabilities he never expected
or
knew anything about, and thus ignorant could not have agreed to at
all. This latter mistake, which we shall describe as an expectation-
mistake, raises an argument of
no
real force.
For
this mistake does
not deny that a contract exists,
for
a contract may exist though
every detail is not provided for; moreover, the mistake rather
concerns the practical effects of
a
bargain, in particular the degree
to which it remains
unfulfilled
or
indeed unfulfillable. Some
expectation-mistakes,
it
is true, are not without legal consequence;
but this (as we shall see) not
on
a basis of freedom of contract,
but
on
a basis of recognising certain limited exchange-interests.
11.
CORRESPONDENCE-MISTAKES
:
SUBJECT-MATTER
We begin with correspondence-mistakes not
only
because they are
the only mistakes that take effect in their
own
right, but also because
they form a sort of logical baseline in the whole area of contractual
mistake. A correspondence-mistake, we have
said,
arises where the
official contract does not correspond with what is shown to be the
parties’ true intentions. The simplest example of
this
is where the
facts conclusively reveal that the parties have misunderstood each
other and have failed to communicate.
In
the best-known instance
cotton was sold to arrive by a .ship named
Peerless,
neither party
realising that there were two such ships, one sailing
in
October, and
the other in December
:
the sale thus related
to
merent cargoes, and
accordingly
no
contract was held to exist.*
Nor
was there
a
contract in an American case, where
a
sale concerned
Judge
Jones’s land,” there being in fact two neighbouring blocks, one
party thinking
of
one, the other of the second block.8 Obvious as
they are these decisions illustrate, in a very general way, what is
meant by saying that parties are not
ad idem,
or
are without mutual
consent,
or
that
no
contract arises
or
exists. We say these things
to
indicate that the so-called contract fails to achieve even the most
minimal certainty
of
terms, the terms describing the particular
subject-matter which the parties purport to buy and sell.*
2
Raffles
v.
Wichelhaus (1864)
2
H.
&
C.
906.
3
Strong
v.
Lane, 66
Min.
94
(1896).
4
One can see that this uncertainty
is
both more basic and radical than perhaps
the more familiar unmrtain(y
of
terms, where,
on
analysis, we find that the
parties instead of agreeing
on
anything definite have in effect merely contracted
to contract: see, e.g., the discussion
in
Scammell
v.
Ourton
[1941]
A.C.
251;
and Cheshire and Fifoot,
op.
cit.;
pp.
34.
35.

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