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Chapter

Cover Cheshire, Fifoot, and Furmston's Law of Contract

8. Mistake  

M P Furmston

This chapter considers the circumstances in which a mistake by one or both parties may affect the validity of the contract, and discusses the two categories of case: (i) where agreement has been reached, but upon the basis of a common mistake; and (ii) where an apparent agreement is alleged to be vitiated by mutual or unilateral mistake. It also considers cases of documents mistakenly signed, that is, where a person is induced by the false statement of another to sign a written document containing a contract which is fundamentally different in character from that which he contemplated.

Chapter

Cover Cheshire, Fifoot, and Furmston's Law of Contract

9. Misrepresentation, Duress, and Undue Influence  

M P Furmston

This chapter discusses three reasons why a contract may be invalid. These are that it was procured by misrepresentation (basically one party misleading the other), by duress (threats by one party to the other), or by undue influence (one party improperly taking advantage of the other).

Chapter

Cover Contract Law

6. Mistake  

A party who enters a contract because of a mistaken assumption as to background fact can realistically complain that she should not have to take the normal responsibility for her apparent consent. On the other hand, the objective test of intentions renders mistakes irrelevant to the validity of contracts. The chapter explores how contract law balances these competing norms. It discusses: (1) when a claimant can escape a contract due to her unilateral mistake as to: the contractual terms, the nature of the document, or the other party’s identity; (2) when a contract be rectified to correct a mistake in recording it; (3) when a claimant can escape a contract on the ground of her mistaken assumption about the relevant (non-term) facts; (4) the justification for relieving mistake; (5) whether the current law is satisfactory, and if not, how might it be developed.

Chapter

Cover JC Smith's The Law of Contract

23. Common mistake: contracts void for failure of a basic contractual assumption  

This chapter examines contracts which were avoided because of the failure of a basic contractual assumption before the contract has been concluded. If a contract has been concluded based on a particular contractual assumption, then the failure of that assumption before the contract has been concluded means that the contract is void. This is because both parties have made a fundamental mistake about a basic assumption. A contract cannot be void due to a common mistake where the risk of an assumption failing has been allocated to one of the parties under the contract, or where the failure is attributable to the fault of one of the parties. Very few assumptions are held to be ‘basic’; the threshold is set at a very high level. The failure of the assumption must, at the very least, render performance of the contract fundamentally different from what was reasonably envisaged.

Chapter

Cover JC Smith's The Law of Contract

24. Frustration: contracts discharged for failure of a basic contractual assumption  

This chapter examines contracts which were avoided because of the failure of a basic contractual assumption after the contract has been concluded. If the failure of a basic contractual assumption occurs after the contract has been concluded, the contract may be frustrated. A frustrating event kills off the contract automatically. However, everything that was done from the making of the contract up to its frustration was, and remains, validly done in pursuance of that contract. A contract cannot be frustrated where the risk of an assumption failing has been allocated to one of the parties under the contract (for example by a force majeure clause), or where the failure is attributable to the fault of one of the parties. The Law Reform (Frustrated Contracts) Act 1943 will determine the consequences of frustration. This legislation provides a statutory mechanism for adjusting the rights of parties after a contract has been frustrated.

Chapter

Cover Contract Law

16. Mistake  

This chapter examines the effects of a mistake on the validity of a contract. A mistake may prevent parties from reaching agreement. First, a court may decide that no contract has been concluded where one party knows that the other is labouring under a mistake in relation to the terms of the agreement and fails to inform that other party of the mistake. Secondly, it may conclude that the terms of the offer and acceptance suffer from a latent ambiguity such that the parties cannot be said to have reached agreement. The third case in which a mistake may prevent the formation of a contract is where there has been a mistake as to the identity of the party who is said to be a party to the contract. The discussion then turns to the leading cases on common mistake, mistake in equity, and rectification. The chapter concludes by considering the non est factum defence, which can be invoked by someone who, through no fault of his own, has no understanding of the document that he has signed.