THE MODERN LAW REVIEW

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1 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 implication 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 , while for the American material see Palmer, Mistake and Unjustified Enrichment (Ohio (1962), p. 99 and prrssint. VOL

2 266 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 subjectmatter or contracting party, provided (and this is the vital limitation) 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 expectationmistake, 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 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

3 ? IAY 1966 A NEW APPROACH TO MISTAKE IN CONTRACT 267 But usually the parties misunderstanding is never quite so extreme. Usually they do identify a subject-matter, either by description (by words) or more ostensibly (by pointing), that is, they identify a particular piece of land or parcel of goods; and, indeed, with the subject-matter so identified, the parties are contracting, for they will know which premises they are to give or take possession of or which parcel of goods will have to be appropriated for the purposes of risk or delivery. It is true that though the parties now know which parcel it is, they still may not know uihat the parcel is, as they may be unaware of its true character, its size or content or quality. The parties, of course, may provide for these details in express terms, but if they do not do this they cannot complain about being mistaken about such a thing, when they have agreed about this thing. Or, approaching this differently, a person cannot complain of having been mistaken unless he can actually show that he never contracted on the terms suggested, so that there is a real discrepancy between the official contract and the parties true or proven intent. But how can this discrepancy be shown? Among several possibilities, first suppose that the mistake in question appears to be purely clerical. Suppose, for example, that in negotiating a lease the parties definitely agree on a rent of 2230, but that by an oversight the rent named in the contract is 2130, an error which is not discovered until after the execution of the lease.s Or suppose that in negotiating the sale of a house, the vendor delivers a plan that excludes a footway, but an exclusion that is inadvertently left out in the final conveyance.6 In either case the rule is that the plaintiff can have the official or formal contract reformed, subject to the defendant s option of taking the contract as amended or of having it set aside. This rule falls within the equitable doctrine of rectification which applies not only to leases and sales but also to gifts by deed as well as marriage settlements. Yet wherever it applies, the overriding condition in rectification is that the parties true intention must be strictly proved: not, admittedly, by irrefragable evidence,8 but still by evidence that leaves no fair and reasonable doubt. In particular, rectification is unavailable if all that is shown is that the parties merely desired to alter the deed,lo or that the other side would not have accepted the contract 5 Garrard v. Frankel (1862) 30 Beav Harris v. Pepperell (1867) L.R. 6 Eq. 1. But distinguish Paget v. Marshall (1884) 28 Ch.D. 255, as regards which see further at note 23 below. 7 In the case of gifts and settlements rectification will naturally operate without any option to the other side. Not, as is sometimes thought, because there is here some anomaly or because there is a fundamental difference between situations of purchase and gift; but, rather more simply, because the donee in a gift, or beneficiary in a settlement, does not require the option since he himself is under no reciprocal liability and, in any case, can always repudiate the gift. 8 Shelburne v. Inchiquin (1784) 1 Br.Ch.Cas. 338 at p Fowler v. Fowler (1859) 4 De G. & J. 250 at p Tucker v. Bennett (1887) 38 Ch.D. 1.

4 268 THE MODERN LAW REVIEW VOL. 28 on any other terms, l or if there was PO intention that ( continued concurrently in the minds of all parties down to the time of the execution of the deed. Turning to another, discrepancy, suppose that an offeree quickly accepts an offer for the sale of goods at so much per pound, where in the preliminary negotiations (as also in the custom of the trade) the price was related to so much per piece. While this has, rightly, been held to be an operative mistake,l* the decision was explained by saying that the buyer must have known of the vendor s mistake when he snapped up ) the offer as quickly as he ~0uld.l~ But this is a completely misleading ground. Why should not an offeree snap up an offer as soon as the bargain strikes him as favourable? Is he to be required to observe some decent interval or even to issue a prior warning to the offeror? What, moreover, is the significance of the offeree knowing or suspecting the mistake? By so knowing the offeree is not cheating about a term in the contract, but may merely think, as surely he has a right to think, that the offeror is hasty or foolish or just ignorant. Moreover, such knowledge can be a completely futile test. For one thing, the defendant can always brazenly deny that he ever knew or suspected any mistake. For another, the mistake now in question can be proved far more objectively. For now we can say that the reference to pound instead of piece was, without doubt, a clerical error, that it was a mere oversight considering what the parties had been saying during the negotiations and since there was absolutely no reason to suppose that they had at the last minute decided to change the relevant measure from pound to piece. It is this sort of error, resting entirely on strict and objective proof, that we call correspondence-mistake.1j 11 McKenqie v. Coulaon (1869) L.R. 8 Eq Fowler V. Fowler (aupr4) at p According to an earlier view, this antecedent agreement had to be an enforceable contract, but this is now an abandoned requirement: Craddock Broa. v. Hunt Ch. 136; United States of America v. Motor Trucks Ltd. [1924] A.C. 196; and see Keeton, Introduction to Equity, Chap. X. However, the misconception is still rife that the plaintiff must show an antecedent contract, enforceable or not; which is easy enough where the contracting consists of distinctive stages (e.g., negotia- tions, agreement, and conveyance), but which becomes an impossible requirement where the negotiations merge with the orsl agreement. This point is further discussed below. 18 Hartog v. Colin d Shields [1939] 3 All E.R Mainly following Webstef v. Cecil (1861) 30 Beav. 62 where 8 buyer similarly snapped up an offer but concerning which there was also independent evidence that it was wrongly added up. And see further at note 21 below. 1s It may be observed that the same sort of correspondence-mistake can occur in gifts, precisely for the reason that we are again concerned with showing a true 88 against an apparent intention. Thus 8 gift may be set aside or rectified if the donor can show, by reference to prior parleys or to drafts of 8 deed or settlement, that he inadvertently included too much money or property in the gift or that he wanted to benefit X instead of Y: see Walker v. Armatrong (1856) 8 De cf. M. & (3. 631; Re Glubb [1900] 1 Ch. 354; Hood V. McKjnnotr [1909] 1 Ch In quasi-contract, on the other hand, the relevant mistake is somewhat different from a correspondence-mistake in the above sense. Fot where in bargain and gift the mistake concern6 8 party s true intention, in

5 hhy 1965 A NEIV APPROACH TO MISTAKE IN CONTRACT 269 If this analysis has been overlooked, one explanation lies in equity. Since equitable intervention first proceeded upon very general grounds (briefly, that it was against '' equity " or " conscience " to enforce a contract based on " mistake " or " surprise,'' particularly if the contract proved oppressive too),lb equity, for a long time, regarded itself entitled to pursue this discretionary line. In Jlalins v. Freeman,'? for example, the defendant bought the plaintiff's land at an auction sale, apparently thinking that the property belonged to someone else. Evidence was given that the defendant was greatly flustered as soon as he discovered he had bought the wrong property; evidence, it is easily seen, that was also inconclusive, for if it showed that the defendant might all along have intended to buy another property, the evidencg was quite consistent with the presumptidp that it was only after the sale that the defendant realised w4at a bad purchase he had just made. But while the court fully admitted that such purchase would stand at common law, they refused specific performance in equity. Later cases refused specific performance on similarly discretionary grounds, wherever a party could persuade Chancery that he had been truly under a mistake, i.e., cases where a party agreed to sell too wide an area including a building indispensable to his trade,18 or where the defendant's clerk had forgotten to add a special premium to the p~rchase-price,'~ or where a purchaser swore he had been mistaken about whether a rent was for whole or half the land,*o or where the party immediately gave notice of his mistake after the making of the agreement to As Romilly M.R. summed it up: '' if it appears quasi-contract the concern is not with intention but with a statutory or customary or contractual duty to pay that is already existing. and the way this duty is discharged: see Kelly v. Solari (1841) 9 M. & W. 54; Norwich Union Fire Ins. Co. Ltd. V. Price [1934] A.C Thia was partly perceived by Foulkes (1911) 11 Co1.L.R. 197 at 299 who distinguished between mistakes in the formation, and in the performance, of contracts. Unfortunately Foulkes did not see that this distinction, though explaining the difference between mistake in contract and gifts and mistake in quasi-contract, did not really touch upon the difficulties of contractual mistakes and their proof. It is true that at some points contractual and quasi-contractual mistakes look factually rather the same, especially where the mistake lies in paying too much or paying the wrong man. But the true reason for this is that the instances just given all represent " active " mistakes. However. whereas in contract it needs an active mistake to show a party's true intent, in quasi-contract an active mistake is all that can arise since the mistake is, as it were, both proved and checked by the existing duty itself. In short, it is one thing to prove an alternative intention, it is another thing to check how an established duty is discharged. 16 Colterley v. Williams (1790) 1 Ves.J. 210 at p. 211; Townshend v. Stangroom 11801) 6 Ves.J. 328 at p. 333; Stewart v. Alliston (1815) 1 Mer. 26 at pp '' The principle is that it is a.,oainst conscience for a man to take advantage of t.he plain mistake of another, or at least, that a Court of Equity will not assist him in doing 60 ": Manser v. Back (1848) 6 Hare 433 at p. 448, per Wigram v.-c. 17 (1837) 2 Keen Neap v. Abbott (1838) C.P. Cooper Wood V. Scarth (1855) 2 K. & J Sroaisland v. Dearsley (1861) 29 Beav Webstcr v. Cecil (1861) 30 Beav. 62, where the court discovered another iniquity, namely, that the offer had been '' snapped up," the irrelevance of which we have already noticed. Nevertheless the decision was correct on its own fact#.

6 270 TEE MODERN LAW REVIEW VOL 28 upon the evidence that there was, in the description of the property, a matter on which a person might bona fide make a mistake, and he swears positively that he did make such mistake, and his evidence is not disproved, this Court cannot enforce the specific enforcement against him. 22 Since, furthermore, these results betokened a general equitable approach, it was extended even to a case of rectification. In Paget v. Marshall 2a the plaintiff agreed to let to the defendant four floors of a house at 500 a year. After the lease was executed, it was found that the deed included a demise of the lessor s own shop. The court allowed the deed to be rectified, being much impressed by the hardship to the lessor: cc it is plain and palpable [said Bacon V.-C.] that the plaintiff was mistaken and that he had no intention of letting his own shop, which he had built and carefully constructed for his own purposes. This latter resdt requires a special conynent or two. The lessee had argued, with some merit one would have thought, that he had been unaware of the lessor s mistake, and that if the deed was to be rectified, he deserved a reduction in rent. The court disregarded this argument, and even decreed costs against the lessee whose opposition to rectification was described as unreasonable and cb unjust. 25 Not only did this conflict with an essential condition in rectification,28 but the decision hardly exemplifies the cc substantial justice between parties, as is sometimes claimed.2t Indeed this, just as the other equitable decisions, clearly overrides what must be a central limitation in any doctrine of mistake, the limitation deriving from the fact that mistake is concerned not with the misfortune to one party, but with a contract made by both, so that the rules governing mistake must hold an even balance between the two parties concerned. This limitation was certainly far better understood in the ( commercial justice pursued at common law. In one instance,28 for example, a seller had sold specific goods, then discovered that he had mistakenly submitted a sample of lower quality, thus considerably overpricing the goods. When the argument was that equity would give relief, Campbell C.J. seemed incredulous: c Would equity at the mere option of the vendor simply rescind the contract? That is what you ask us to do. 29 Even in equity, however, a different doctrine was beginning to The mistake here related to a wrong adding-up, a fact that waa easily proved by evidence dating frcm before the contract, not just by conduct after the sale. 22 Swaisland v. Dearsley (supra) at p (1884) 28 Ch.D Ibid. at p Ibid. at p The condition, namely, that the plaintiff would have to 6how a common intention on both aidea: see in particular McKenaie v. fhdson (1869) L.R. 8 Eq. 368 and at note 11 above. In May v. Platt [1900] 7 Ch. 616 at p. 623, Paget v. Marshall was regarded a8 an erroneous decision but thia not on sufficiently discriminating grounds. 27 Cheshire and Fifoot, op. cit., p Scott v. Littledale (lb68) 8 E. & B Ibid. at p. 821.

7 MAY 1965 A NEW APPROACH TO MISTAKE IN CONTRACT 271 appear, and instead of diverging from common law,30 equity rather began to follow it. The new stage was set by Jforley v. Cla~ering.~~ Here the defendant agreed to purchase three leaseholds, intending to use the property for a purpose (opening a restaurant) which, it turned out, the lease forbade. The defendant resisted specific performance on the ground that it was a settled rule in equity not to enforce a contract if, as here, the vendor knew of the buyer's error or at least suspected it. The court would not hear of this. Since the parties were on an equal footing, it was for the purchaser to ascertain whether the purchase would serve his purpose or not; at any rate, the purchaser might have a purpose that was private to himself and one he could always change. The well-known decision in Tamplin v. James 32 strongly confirmed these thoughts. A buyer refused to complete his contract upon discovering that, contrary to earlier belief, a garden was not part of the property he agreed to buy. This mistake could easily have been discovered had the buyer looked at the plans. Nor, as the court insisted, cap a defendant " be allowed to evade performance by the simple statement that he has made a mistake. Were this to be allowed, a contract could rarely be enforced upon an unwilling party who was also Unscrupulous, for that person might always escape from completing a contract by swearing he was mistaken." s3 The temptation to perjury was further stressed in Van Praagh v. E~erZdge.3~ The defendant mistakenly purchased one lot instead of another, a mistake due to his carelessness but of which he immediately notified the other side. The court was quite prepared to admit the existence of an honest mistake, but it saw that this was not exactly the point: " if the Court relieves this gentleman who honestly confesses his blunder from performing his contract, that would be inviting someone else to come here dishonestly to get off his bargain." s5 Moreover, in specifically refusing to follow Malins V. FreernanY3O the court gave the clearest indication how much the equitable approach had changed. Some of the older cases may still be relevant to the extent that they exhibit equity's residual power to alleviate a special hardship, where the parties are not on an equal footing, as where one party suffers from a particular di~ability.~' But such 30 The typical illustration was Wood v. Scarth (1855) 2 K. & J. 33, where after equity refusing specific performance, the plaintiff turned to common law where his contract was enforced : (1858) 1 F. & F (1860) 29 Beav. 84; 30 Rpav (1880) 15 Ch.D Ibid. at pp. 217, 218, [1902] 2 Ch Ibid. at p The judgment was reversed in the Court of Appeal, hut on another point. It is true that Collins M.R. expressed brief doubts as to the correctness of this result, which doubts, however, seem qute unjustified. And fiee on this also Williams on Vendor and Purchaser (3rd ed.), p. 751, as well as the very careful judgment by Blair J. in Wallace v. McGirr [1936] N.Z.L.R. 483 at p (1857) 2 Keen 25; and see at note 17 above. 37 See. e.g., Torrance v. BoEton (1872) L.R. 8 Ch. 118, where the purchaser war deaf.

8 272 TEE MODERN LAW REVIEW VOL. 28 situations apart, the new and stricter approach seems the only possible, if equity is to be governed not by discretion but by principle.a8 So far we have been dealing with mistake that is often due to the mistaken party himself. We now turn to certain other mistakes caused by the other party who in these circumstances is usually the vendor; moreover caused by a misrepresentation that can be either fraudulent or innocent. Now misrepresentation, as everyone knows, today forms a separate rubric, if only to accommodate the many rules that distinguish the misrepresentation from expressions of opinion and so on. Even so, the connection between mistake and misrepresentation has to be most strongly stressed. Clearly, the reason why a misrepresentation has legal effect is not just the punitive one of the vendor being dishonest or at fault, since the vendor may be entirely innocent. The true reason rather lies in the fact that the buyer is simply not getting what alone he has agreed to buy. The prior misrepresentation, it is true, is not itself a contract, nor part of one, but only induces a subsequent contract. Still, the point is that the subsequent contract thus induced in a sense ratifies the parties prior contractual intentions consisting in part of material representations that turn out to be untrue. Indeed, the misrepresentation thus incorporates what is a correspondencemistake, since there is here an evident lack of correspondence between the prior contractual intention and the contract as it turns out. This close interrelation of mistake with misrepresentation is also shown in other ways. Thus a contract can be rescinded if the misrepresentation is due to a third person rather than to the vendor. In Lansdown v. Lansdown8@ the parties executed a conveyance to divide their lands, both acting upon a third person s wrong legal advice. The court ordered the bonds and deeds to be cancelled since they had been 6 obtained by a mistake and misrepresentation of the law. 40 Again, a vendor s misstatement may seem far too indirect to qualify as a misrepresentation in the accepted sense. Take Denny v. Hancock which fully illustrates this. Intending to sell property, the vendor prepared a plan which showed the property as bounded on one side by a mass of shrubs. The purchaser, with the plan in hand, went to inspect the property, where he found a belt of shrubs including three magnificent trees, which however belonged to the adjoining property, though neither the plan nor the inspection made this clear. He then bid for the property, being under the impression that the trees were part of it, it being admitted 88 The fact that the equitable approach has in fact changed is, curiously, far from generally appreciated, either in the booke or by courts: see, for example, SoIle v. Butcher [1960] 1 K.B. 671 at p where equity s relevant jurisdiction is still regarded as predominantly discretionary. 89 (1730) 2 J. & W Zbid. at p And see Cooper v. Phibbs (1867) L.R. 2 H.L (1870) L.R. 6 Ch. App. 1.

9 h1.t-i 1965 A XE\V APPROACH TO MISTAKE IN CONTRACT 273 that such trees formed a material part of the value of the property as a residence. The court refused specific performance on the ground that the purchaser had been misled. It transpired that the purchaser might have had quite another reason for not wanting to complete; but this the court rightly.held did not matter: it did not matter simply because the mistake was independently proved. A similar situation can arise in sale of goods. In Scriven v. Hindley 4L goods were put up for sale in parcels bearing certain marks. Unknown to the buyer, these marks mere used both for hemp and tow, though it was natural to think that these marks would apply to one thing, but not to the other, nor was the particularity of these marks explained either in the catalogue or by the auctioneps. Again the coiltract was held to be vitiated as the buyer was entitled to say that he had been misled. Indeed, a correspondence-mistake will arise wherever the description of property on which the buyer is made to rely happens to be '' improper, insufficient and not vcry fair." 43 It will now have been seen that a correspondencc-mistake not only helps to reveal the parties' true contractual intention, and in this way protects their freedom of choice, it also performs the much wider function of unifying the relevant field where before we tended to think in terms of separate approaches and remedies. How immensely important such a unified view can be becomes obvious from a problem that is posed by Rose v. Pi~1.~~ Here, very briefly, the plaintiff wanted to get hold of horsebeans, described as fe'veroles, for an overseas purchaser. Not knowing what fe'veroles were, he asked the defendant, who told him that they were nothing but Tunisian horsebeans, which the defendant added he could procure. After further negotiations the plaintiff then bought from defendant 500 tons of these horsebeans, which however the foreign purchaser rejected as they were the wrong beans, being fbves, not fe'veroles. The plaintiff argued that though the written contract only mentioned horsebeans, what he had really bought were horsebeans of the je'verole type. And the action he brought was one for rectification to make the contract read " horsebeans (fe'veroles)" instead of horsebeans simpliciter, an amendment that he thought would enable him to sue on the rectified contract in damages. While the lower court allowed rectification, the Court of Appeal thought such remedy inapplicable : inapplicable because the plaintiff had failed to prove that the written contract did not correspond with the actual contract the parties had entered into; indeed, the parties had outwardly ac;reed - for the sale of horsebeans, not fe'veroles. This decision is not easy to understand. For the court further admitted that the 42 [1913] 3 K.B Torrance V. Bolton (1872) L.R. 8 Ch. 118 at p. 123; and see also Jones v. Riwmer (1880) 14 C,h.D In these cases, moreover, it uill be for the \en lor to show that the pltrchaser is not actually misled. 44 '19.53; 3 Q.B. 450

10 274 THE MODERN LAW REVIEW VOL. 28 defendant s assurance that ftveroles were horsebeans would have justified either an action for innocent misrepresenation, or one for breach of an express warranty.45 But, surely, to admit this was to admit a very great deal, for the admission was merely another way of saying that the parties had in fact intended to buy and sell not just horsebeans, but ftveroles. If so, how could it be argued that the outward agreement was for horsebeans alone? If so, again, how could one seriously object to a rectification, since rectification would do nothing more than incorporate a truth that the defendant had himself represented or warranted? The court, it is true, defended its result by insisting that even if rectification did not require a prior contract complete in all particulars, it did require a concluded contract, one showing that the parties had agreed, not just intended, on the other terms than those appearing in the written Yet, again, is this not to make too much, in this context, of any real difference between agreement and intention? Once it is clear that the parties did share a mutual intention, that moreover this was a continuing intention (and continuing the intention will inevitably be if the innocent misrepresentation or warranty does induce the subsequent contract), this mutual intention then surely amounts to a prior concluded contract. Perhaps the reason why this has not been seen is that we tend to think of these common intentions as though they merely were intention-forming negotiations. while we also tend to think of a concluded contract as an agreement neatly reduced to paper. However, when we begin to remember that a written agreement merely confirms a prior oral agreement, and then begin to analyse the constituents of that oral agreement, we quickly discover that its crucial component is a common, continuing intention, even if this is not usually or formally described as a concluded contract. It must go without saying that the intention here referred to is an articulate, not a secret or private intention. Obviously only an articulate intention can form the basis of a common agreement, whereas a person s private intention may inform his motive or purpose, but cannot by itself become a term in a contract The reason why the plaintiff did not proceed in innocent misrepresentation is that this action had become inapplicable since, the goods being disposed of, no restitutio was possible. The plaintiff s reason for not suing on the warranty was that he, quite wrongly, assumed that this would be offering parol evidence contradicting a written agreement, an assumption based on s misconstruction of Smith v. Jeflryes (1846) 14 M. & W. 561, a case that had nothing whatever to do with the present problem: see also Rose v. Pim [1953] 2 Q.B. 450 at pp Ibid. at p. 462, where the court also disapproved of a suggestion that a continuing intention could sup rt a demand for rectification. That such a continuing intention might suge had not only been mentioned in Crane v. Hegeman-Harris Co. Inc. [1939] 1 All E.R. 662 at p. 664, but had been recognised as far back as PowZer V. Fowler (1859) 4 De (3. & J. 250, perhaps the single most important case on rectification. 47 For a somewhat similar point, see Smith v. Hughes (1874) L.R. 6 Q.B. 597 at p. 606, per Cockburn C.J.

11 MAY 1965 A NEW APPROACH TO MISTAKE IN CONTRACT 275 Rose v. Pim illustrates another, more widespread misconception. While recognising that the parties had been mistaken, even fundamentally mistaken, the court felt obliged to disregard the mistake since the contract itself could not be regarded as non-existent, the parties having agreed with quite sufficient certainty on the same subject-matter, namely, had agreed to buy and sell horse bean^.^^ The court, in other words, believed that an operative mistake could never arise unless the contract more or less collapsed as a nullity. But this was a wrong view of the matter. In a situation such as the Peerless case,49 previously noticed, the mistake certainly reveals a practical nullity, in the sense that the parties are so entirely at cross-purposes that they will not even know what to do in point of performance. Yet as regards the more typical as also more important situations, correspondence-mistakes are not at all concerned with revealing a nullity, but are concerned with showing what is in effect an alternative agreement, either an agreement that differs in terms from the official agreement or an agreement that merely supplements (as in Rose v. Pim) the written contract. In short, correspondencemistakes, far from denying or nullifying mutual consent, are rather meant to establish the actual truth about the parties' agreement. Indeed we need to recognise some such category as correspondence mistakes to be able to make just this point with any clarity EXPECTATION-MISTAKES : SUBJECT-MATTER Expectation-mistakes raise other problems. The party complaining of mistake now relies on a much wider objection. " Can you really believe," he in effect says, " that I made the kind of contract that the other side now seeks to enforce against me? I admit that I can show nothing in the terms of the contract that would support or excuse me. Still do you really think that I made a contract to pay good money for so little in return? " On general principle, needless to say, this objection cannot possibly succeed. Not because there is here no mistake, for it may be only too obvious that a person is ignorant or mistaken either about what a bargain meant 'or how it would turn out. Rather, the objection cannot succeed because it would introduce an automatic excuse enabling a person to terminate a contract whenever he disliked it. It is precisely because of this that, as we previously argued, even correspondence-mistakes have to be limited to mistakes that are strictly or objectively provable, for unless so provable the allegation of mistake, quite apart from facilitating perjury, would give superior rights to one ifistead of equal rights to both parties. Precisely this is also the import of so basic a decision as Smith v. Hughes.so Here, it will be remembered, a buyer having bought by sample several quarters of oats, then 48 [1953] 2 Q.B. 450 at pp. 458, 459, Raffles v. Wichelhaus (1864) 2 H. dc C. 906, and see at note 2 above, 50 (1871) L.R. 6 Q.B. 597

12 276 THE MODERN LAW REVIEW VOL 28 objected that he had wanted old oats, not the new oats supplied by the vendor. Assuming, as was found, that no mention of cc old oats had been made, the buyer got exactly what he had (by sample) contracted to buy. Similarly in a more recent case,51 where a buyer ordered an article he specifically described. Samples were sent to him, and the goods finally delivered satisfied both the description and the sample. It then appeared that the article was a mixture, not the pure substance that both buyer and seller assumed it to be. But though both parties were thus under a fundamental mistake, this could not affect the sale since, again, the buyer was simply getting what he had bought. In short, a buyer cannot buy goods and then complain: c I m sorry, this is not quite what I wanted to have. 52 However, if the general principle is straightforward, real di5- culty arises from the fact that some expectation-mistakes do have positive legal ebect. Thus a contract has been avoided (to recite the best-known instances) where a cargo had perished at the time of sale,st or money was paid on a life insurance policy where the assured was already deadys4 or where property sold already belonged to the purchaser,56 or where a tug proved incapable of doing the job it was hired for. Sensible as they seem, we have nevertheless to be most careful how these results are to be explained. It is misleading to argue that such contracts are c nothing but a phantom since there is nothing upon which they can fasten. 57 It is misleading because, as repeatedly pointed out, the parties here do make a contract in certain enough terms, since they do identify the goods, or property, or services they are contracting about. Their mistake rather concerns the eflect of a bargain, in particular whether or not it is capable of being performed. Again, it is not enough to say (what current explanations constantly repeat) that the contract is vitiated by a cc fundamental fact, J8 or by an cc underlying assumption, or by a cc fact essential to the making of the agreement and the basis upon which the parties purported to contract, 6o or because of ( an implied condition precedent. For these explanations do not reveal why something is a fundamental or necessary 51 Harrison & Jones v. Bunten d Lancaster Ltd. [1953] 1 Q.B If manufacturers who buy their raw material in a particular trade choose to order goods, whether ascertained or unascertained, by a description or brand known in the particular trade, and goods answering to the particular description or brand are supplied, I cannot see why they should, in the absence of any misrepresentation or breach of warranty by the seller, have any cause for complaint : ibid. at p. 658, per Pilcher J. 58 Couturier v. Hastie (1856) 5 E.L.C Pritchard v. Merchants, etc., Assurance Society (1858) 3 C.B.(N.a.) 629; StrickEand v. Turner (1852) 7 Exch. 208; Scott V. Coulson [1903] 2 Ch s Binghan v. Binghan (1748) 1 Ves. J. 126, the best known of many other examples. 56 The Salvador (1909) 26 T.L.R Cheshire and Pifoot, op. cit., p Bell v. Lever Bros. [1932] A.C Norwich Union Fire Ins. Co. V. Price A.C Craven-Ellis V. Canons Ltd I!.B SoZIe v. Butcher [1950] 1 K

13 ni.\y 1965 A KEW APPROACH TO MISTAKE IN CONTRACT 277 assumption. It cannot be because one side suffers a '' fundamental )' disappointment, for this we have seen to be an irrelevant ground. It cannot be to ascertain the parties' true intentions, for these are not in dispute at all. Is there then not just one assumption that one can describe as '' necessary )) or '' basic," namely, the assumption that is contained in the basic terms in a contract, terms the parties agreed to with sufficient certainty? It follows that the proper explanation cannot be " assumptual )) or '' consensual," but must be of another kind. And, indeed, as we look again at the relatively few expectation-mistakes which the law has recognised, what we find is that they are excuses granted in respect of certain unexpected effects of a bargain: moreover, excuses that perform the very same function as certain other excuses no less well known. On the promisor's side we have long known a doctrine of impossibility of performance, while on the side of the promisee there is a doctrine of failure of consideration, not to mention the implied-by-law warranties of title or quality.62 The plain purpose of all these excuses is to protect certain exchange-interests, that is, protect the promisor against too heavy a loss created by the unexpected impossibility, or to ensure that the promisee gets at least something for his money, though this always subject to the wider principle that prohibits intervention just to make a bargain " adequate." Seen as excuses, furthermore, the results mentioned earlier offer little or no difficulty. A buyer is excused to pay for res extincta or res sua, simply because he would get nothing for his price as his consideration totally fails. Conversely, a promisor or seller is excused from having to deliver goods that have perished, since the impossibility creates exactly the same burden whether it occurs before or after the sale. In many cases, also, these circumstances combine, so as to produce reciprocal excuses, excusing the one side for impossibility, the other side.for failure of consideration. Unfortunately, these reciprocal excuses, instead of being recognised qua excuses, have come to be explained by saying that the contract is void ab initi~.~~ This has proved a profoundly misleading explanation, in several respects. For one thing, it became tempting to think that the distinctive feature of mistake was its '' voidness )) in contrast to the " voidability )' attaching to innocent misrepre- sentation, a contrast that began to over-separate the two remedies, a matter to which we shall have occasion to return. For another thing, the language of " voidness," as it connected with that of '' basic assumption," insinuated the idea that we were here dealing with a question of mutual consent, not with non-consensual excuses introduced for the protection of exchange-interests. Precisely this a* Sale of Goods Act, 1893, ss ; and see Stoljar, 'I The Doctrine of Failure of Consideration " (1959) 75 L.Q.R Sale of Goods Act, 1893, 8. 6.

14 278 TEE MODERN LAW REVIEW VOL. 28 led to the difficulty in the McRae case."' Thus, suppose that the subject-matter of a contract, i.e., a ship, has ceased to exist; and suppose further that the seller, though affected by this initial impossibility has not been entirely faultless in that he carelessly caused the buyer unnecessary effort and expense. However, if extinction of the subject-matter is taken to vacate and avoid the whole contract, the buyer no longer has a contractual action against the vendor. The difficulty of course dissolves if we put the question differently, that is, if we ask not whether a contract is void, but whether certain unexpected effects of a bargain should excuse both parties or (as in the above example) should excuse only 0ne."5 Again, the,notion of '' voidness yy supported a distinction between mistake as to subjectmatter, which was " basic ') or '' fundamental," and mistake as to quality that came to be regarded as a mistake affecting one person's '' motive " rather than both parties' outward consent. In many ways this distinction was harmless, if only because in"many cases what was called a mistake of motive or quality coincided with the simple bargain disappointments which, we explained earlier, cannot have legal effect, while mistakes as to subject-matter overlapped with those cases of res extincta or res sua which gave rise to an excuse. Yet the distinction was utterly misleading in that it purported to be of general application, when its true applicability was far more limited. For in many situations the subject-matter of a contract does not become similarly extinct. In particular, land does not perish, if we put aside earthquakes or floods nor do events which have already happened and which can be important in service-relationships, as in Bell v. Leuer,"' a most celebrated case. L. paid B. a large sum of money to compensate B. for prematurely terminating his employment as manager of a firm. It was then discovered that B. had committed breaches of fiduciary duty which would have justified his dismissal without any compensation at all. The House of Lords thought that L. could not recover this money; and this because the mistake related to quality, not to subject-matter; indeed, the parties having agreed on the same subject-matter, they " must rely on the stipulations of the contract for protection from the effects of facts unknown to them." It is diilicult to see what, in these or similar 64 McRae v. Commonwealth Disposals Commksion (1951) 84 C.L.R "5 Such, it will be remembered, was the result in the McRoe case itself, where the seller was held!fble in dtfnsges. However, to 8mVe at this result the court had to find a condition that the ship had to be supplied. This was in fact begging the uestion, since the case concerned the unezpected effects of a contract, not the %reach $ an undoubted term, as the court fully admitted that the facts involved an element of mistake." Indeed, unless the effects are completely unexpected, we cannot dgnificantly talk of mistake, which is also the reason why mistake is irrelevant in contracts of calculated risks, e.g., Holmes v. Payne [1930] 9 K.B. 901, or in contracts of e speculative kind, e.g., mining leases: Jeflerys V. Fairs (1876) 4 Ch.D As to which possibility, see Hitchcock v. Giddings (1817) 4 Price 135 8t p. 141, per Richards C.B. "7 [1932] A.C Ibid. at p. 2!%, per Lord Atkin.

15 5I.t~ 1965 A NEW APPROACH TO MISTAKE IN CONTRACT 279 circumstaiices, a relevant mistake as to subject-matter could have been. Moreover, the reasoning here overlooked the possibility of certain excuses, i.e., excuses not concerned with what the parties actually agreed to, but with a person s right to expect some degree of contractual fulfilment, especially where (as here) the plaintiff had paid money on a consideration that totally failed. The House, admittedly, was not bound to apply in contracts of service the exchange-standards mainly worked out in sale of goods; but it was free to do so (and for the sake of symmetry perhaps ought to have done so), contrary to what the majority believed. Greater freedom was exercised in a more recent case. In Solle v. a flat was let at an annual rent of 2250, both lessor and lessee wrongly believing the flat to be no longer controlled, when it still was, the controlled rent being flao. The tenant, after two years occupation, sought, to recover the rent he had overpaid. The Court of Appeal agreed that there had been a common mistake and that the lease must be set aside?o: but they seemed to think that the present mistake could not be given effect to save in equity.? Though right in result, this was nevertheless an unsatisfactory approach. It resuscitated notions about equitable mistake which, we have argued before, are no longer tenable if they suggest that equity still has a discretionary jurisdiction it can manipulate aside from principle. Also, the discretionary approach obscured the very exceptional nature of the present case, together with the fact that in a sale or lease of land a court has exceedingly little room to intervene. Normally the parties must expressly specify the qualities about the land they deem material or relevant, for unless expressly mentioned they are taken to know and to have accepted the property as it exists.72 Normally, again, the parties can hardly claim to be economically mistaken about the rent charged, since, on the one hand, they are free to bargain over the amount and, on the other (and again disregarding floods, etc.) the rent or consideration will never totally fail. The one possibility that remains is precisely the one that happened here: that unknown to the parties a statute had halved the chargeable rent. It then is clear that the mistaken or unexpected effects of a contract for land are treated very differently from those of a contract for goods. Still, the important point now [1950] 1 K.B This by a majority, one Lord Justice dissenting on the ground that the mistake n-a8 one.of law. The majority also held lhat the lease should be set aside on terms, that is, the lessee had the option of either paying the proper rent, which wa~ the rent originally agreed on ( 250), or to go out : ibid. at p Equity, it was said, had shown a progressive development, as it allows a contract to be set aside where it is unconscientious, or where one party knowing the other to be mistaken lets him remain under his delusion. Indeed, the court added, had Bell v. Lever been considered on equitable grounds the result might have been different: see ibid. at pp See, e.g., Jones v. Clifford (1876) 3 Ch.D. 779; Allen v. Richardson (1879) 13 Ch.D. 524.

16 280 THE MODERN LAW REVIEW VOL. 28 is that one cannot even begin to understand the relevant differences unless we distinguish a separate category of expectation-mistake, that is, the mistake which as a general rule remains inoperative, except for a few, very few, situations in which certain, and still rather limited, exchange-interests are recognised. IV. CORRESPONDENCE-MISTAKES : PERSONAL IDENTITY As we turn to personal identity, what we previously described as correspondence-mistakes assume modified form. The reason is not far to seek. If as regards subject-matter any true lack of correspondence directly affects our freedom of choice, as regards identity the law really begins with a different premise, namely, that in the typical case (or, rather, what historically has been the typical case) it cannot matter whether there has been a mistake or not. For in our ordinary buying or selling, it is of no importance who the supplier is or who pays for what, provided the supply is satisfactory and payment is complete. So that even if in negotiating or executing a contract, the parties misrepresent (say) their weight, their age or their names, these personal inaccuracies do not affect the sale, as long as this sale is cash-and-carry and does not involve a personal or continuing relationship. Against this background it is easy to agree with Bacon that praesentia corpon s tollit errorem nornini~,~~ or to agree with Pothier that < consideration of the person forms no ingredient in the contract. I4 But, of course, there are situations where a person s identity is far more material and where personal characteristics do enter the contractual choice. A party may insist on dealing with one particu: lar person, or on dealing with all persons except one. And such a condition has to be respected, since one may be as selective about whom one wants to contract with as about what one wants to buy. In Said v. Butt,75 a most telling illustration, a person procured a ticket for a theatre when he knew very well that he would not gain entrance, having earlier made unfounded charges against the theatre staff. The court had no doubt that this was a contract (or admission) the theatre owner could repudiate, for ( the plaintiff could not constitute himself a contractor with the Palace Theatre against their knowledge, and contrary to their express refusal. 76 More interesting are the cases where personality assumes importance without a party stipulating any exclusivity. Invariably these cases envisage some kind of continuing relationship in that one party will have to trust the other either with credit, or with a special skill, or with the continued possession of things or premises. Thus where in a sale one side is induced by the other s false personal assertions to part 73 Law Tracts (1737), p. 102, cited Ingram v. Littls [1961] 1 Q.B. 31 at p Pothier, Treaty of Obligations (Evans s trans.), para K.B Ibid. at p. 506, per McCardie J.

17 MAY 1965 A NEW APPROACH TO MISTAKE IN CONTRACT 281 with money or goods,i7 there is no doubt that the former can rescind the contract (apart from the problem of Cundy v, Lindsny,78 a problem to which shortly we return). Conversely, a borrower can repudiate a contract with a moneylender who conceals his true identity, since this identity can here be crucial because of the added danger of ~ppressiveness.~~ Then one can terminate a contract for the painting of a portrait where the artist, in fact quite unknown, has by verbal cosmetics turned himself into a famous one.8o Or one can rescind an agreement for a lease if the lessee has been less than truthful about himself, since (as readers of Jane Austen s Pcrstrasion will know and as a recent case has affirmed)*l a tenant s status and character can be of vital importance as he may turn out to be quite undesirable. Similarly one can repudiate a contract with a person who pretends to act as an agent when in truth he is his own principal, the view here being that a person cannot really be reliable, if he dare not contract his own name.s2 Now in many of these situations, it will have been noticed, the mistake mas brought about by deliberate and dishonest misrepresentation, which would have permitted the rescission to be put on the groxnd of fraud. This, however, is not always so. A mistake can be due to a misrepresentation that is innocent rather than fraudulent, equity providing relief in either case. Again, the mistake can arise regardless of any misrepresentation if there is no remedy for an innocent misrepresentation, as formerly was the case at cammon law,s3 or if (though this happens more rarely) the mistake is not caused by any misrepresentation at all. Suppose, for example, that D. accustomed to deal with X with whom he has credit, sends a further order to X but, unknown to him, X has sold his business to P who accepts D s order. Here D can repudiate his contract with P: when a contract is made, in which the personality of the contracting party is or may be of importance, as a contract with a man to write a book, or the like, or, where there might be set-off, no other person can interpose and adopt the contract. &* In other v v. ll*oriuq #(. Ci/:,<w [l!i.?g;.i.(, (1E7h) 3.\l p.ca.; Onrdwn v. Street Q.B Ingram v. Little /l9g1] 1 Q.B. 31 at p Sozcler v. Potter [194Oj 1 K.B Bickerton v. Burrell (1816) 5 M. 8: W The view has soinexhat changed both at common Ian-; SI?.inner V. Stocks (1821) 4 B. & Ald. 437, and in equity; Fellowes v. Gwydyr (1836) 1 Sim. 63; Nelthorpe V. Holgate (1844) 1 Coll Something of the older view, however, reappears in Newborne v. Semolid Ltd Q.B Kennedy v. Panama Royal Mail Co. (1867) L.R. 2 Q.B. 580; but see now Leaf V. International Galleries ( K.B Boulton v. Jmes (1857) 2 H. & N. 5G4 at p per Bramwell R. In this case the contract had already been completed, P suing for the price for the goods he had supplied. As it was held that P coiild not recover the price, we must assume that D had either already dispofied of the goods. or that thc price was covered by his set-off Kith 5. Without these assumptions. the result would today be different, for the law is that goods supplied by a stranger must be returned. or if not returned, must be paid for according to their value, if not acrmding to fheir market-price.

18 282 THE MODFSN LAW REVIEW VOL. 28 words, a contract becomes terminable not only where the defendant misleads the plaintiff, but even more importantly where the defendant is unaware that the plaintiff is mistaken, though in this last case the plaintiff must prove by other evidence (such as previous negutiations or the existence of a set-off) that the defendant is demonstrably not the person with whom he intended to contract. This shows that we are again dealing with a correspondence-mistake, though one with a difference. For the lack of correspondence, if a necessary is not a sufficient condition, since the mistaken party still has to show that the mistake is material or relevant to the contract he wishes to terminate.85 There is another point. In many of the situations here considered the mistake of identity arose where there was merely some danger about the other person, not yet a danger that had materialised. In actual fact a person lying about his solvency might actually pay off his debt; a person pretending to be a mere agent might be more credit-worthy than the (non-existent) principal; the money-lender hiding his identity might, at least in this case, reveal a warm heart; while a seemingly disreputable person might, once let into occupation, lead a perfectly virtuous life. Of course there are cases where one will not discover one s mistake until the other party actually proves obnoxious or insolvent.8b But the interesting thing now is that a contract is terminable for mistake of identity if the mistake only shows that the other side may prove undesirable. And this reveals perhaps yet another reason why the common law needed a separate doctrine of mistake. Because if a mistake of identity often resulted from some deception, it still seemed inappropriate to regard this deception as being a complete instance of fraud or deceit, as the mistaken party could seek relief on the ground of a probability and well before any actual damage occurred. To stress this is also to stress the fact that mistake was indeed a remedy of very broad base. For provided the mistaken party s consent was vitiated in a material or relevant particular, it did not matter whether that consent wag described as ( void or voidable, or whether the mistake involved a confusion between one or two persons (what later became 85 In this light, moreover, there 9tn be little objection to Pothier s view that a contract is not avoided unless consideration of the person with whom I am willing to contfwt enters as an element into the contract which I am willing to make : op. cit., para. 19. The statement may appear a little vague, but it is obvious frym other things Pothier sas;?, in this a:d preceding paragraphs, that the consideration of the person would not enter as an element unless objectively relevant to the parties relationship. Indeed it is in this sense that Pothier has been understood, at any rate by some courts: see Smith v. Wheatcroft (1878) 9 Ch.D. 223 at p. 230; Gordon V. Street [1899] 2 Q.B. 641 at p. 647; Lake v. Simmons [1937] A.C. 487 at p. 501; Said v. Butt K.B. 497 at p. 502; Dryster v. Randall [1926] Ch. 932 at p. 939; B owler v. Potter [l940] 1 K.B. 271 at p. 275; Dennani v. Skinner [1948] 2 K.B. 164 at p In which case the mistaken party would also have other remedies, such as the remedy of the unpaid vendor s lien under which a seller can refuse or stop delivery: see Sale of Goods Act, 1893, 8s. 39, 41, 44.

19 MAT 1965 A NEW APPROACH TO MISTAKE IN CONTRACT 283 the distinction between identity and attribute ). Moreover, only a broader concept of mistake can really explain two decisions by the House of Lords that otherwise remain inexplicable: one decision which took it to be an operative mistake where a firm was deceived by an impostor into paying money to the latter s ~ominee,~~ and another that similarly recognised a mistake where goods were wrongly procured by a person introducing herself as the wife of a fictitious socialite.s ti These points would hardly be worth making had the whole picture not become radically distorted by a parallel development that began with Hardman v. Booth.a9 The plaintiff called at a firm by the name of Gandell & Co., and inquiring for Mr. Gandell was met by one Edward Gandell who was a clerk but not a partner, the business being exclusively owned by Thomas Gandell. Believing he was dealing with the firm, the plaintiff eventually sold and delivered goods to Edward, which goods Edward pledged with a personal creditor. Though clear that the plaintiff had been under a mistake, the question was whether he could avoid the contract as against a third party who had given consideration and acted in good faith. The decision was that the goods were obtained not by a mere fraud, but by larceny by trick, which both destroyed the contract completely and prevented property from passing to the purchaser. The reason why this was a trick, not just a fraud, was that the plaintiff had supposed he was dealing with the firm, without ever intending to deal with Edward personally. This reasoning was much confirmed in Cundy v. Lindsay,g0 usually regarded as the most important case of mistaken identity. As this was in substance the identical case of Hardman v. Booth over again, Dl larceny by trick was again held to,destroy the though it was also said that had the goods been procured by false pretences, property would have passed to the bona fide purchaser.93 Now this result, it must be admitted, had some justification in the law as it stood. Given the basic rule of nemo dat quod non habet, given the fact that the Factors Acts did not here apply, given further the fact that some deceptions had come to be regarded as larceny rather than fraud, one could at least understand why 87 Jones v. Waring d Gillow [1926] A.C Lake v. Simmons A.C Here, admittedly, one may doubt whether the House of Lords correctly interpreted the exception-clause in an insurance policy which seemed to include transactions of this kind. But this does not alter the point that the Lords recognised the mistake as such, even if their reasoning was far from elegant. In particular, Lord Sumner s distinction (ibid. at p. 509) between defective-but-real and defective-and-unreal consent waa peculiar in the extreme. 8Q (1863) 1 H. & C (1878) 3 App.Cas Ibid. at p It was a trick, because the cheat had obtained the goods pretending he was a ffrm known to the plaintiff. Of the cheat, said Lord Cairns, the plaintiff knew nothing, of him he never thought. With him he never intended to deal : ibid. at p For this reason property did pass in King s Norton Met,$ Co. Ltd. v. Edridge (1897) 14 T.L.R. 285, where goods were obtained by a long firm fraud, the cheat operating under an alias but there being only one entity.

20 284 THE MODERN LAW REVIEW VOL 28 property should pass in one but not in the other case.94 Still, it is important to see that this was a distinction between larceny and fraud, not a distinction directly defining contractual mistake. Neither Hardman nor Cundy made much mention of mistake, let alone suggest that mistake depended on larceny by trick rather than fraud. However, seeing its context, the trick-fraud distinction could easily be given a wider twist, so as to intrude upon mistake itself. This, abparently, first happens in Phillips v. brook^,^^ where (very briefly) a cheat fraudulently obtained valuable pearls from a jeweller by introducing himself as another (existing) person of considerable social prominence. The court was much pressed to hold this an operative mistake, if only because there was here confusion in respect of two identities rather than one. Yet the court concluded that there was no mistake. For the jeweller intended to contract with a person physically identified, and even if the contract was rescindable for fraudulent misrepresentation this was quite different from avoiding it on the ground of mistake. It is true that this decision, long a subject of criticism, has recently been so radically distinguished to be practically overruled.qs Even so, this whole approach has left us with a.doctrine (now usually interpreted as the doctrine of Cundy v. Lindsay) that a mistake of identity must involve two entities, not only one, so as to make the mistake relate to identity, not just to ( attribute, which in turn will render the contract cc void instead of ( voidable. It is also true that in actual fact this doctrine has only been applied to the third party purchaser, and that aside from him the courts have applied a much wider view of mi~take.~7 Nevertheless, the fact remains that even if the doctrine of Cundy v. Lindsay is technically isolable, its theoretical implications have been ruinous indeed. V. CONCLUSIONS Let us summarise our main points and results. It will be clear that the analysis here presented argues for a complete reversal of the auspices under which contractual mistake has generally been considered. Instead of putting the emphasis on ( basic assumptions, including void or vacated contracts, we have been stressing a type of mistake that reveals the parties true contractual intent. Instead of regarding Cundy v. Lindsay as the prototype of mistaken identity, we have been far more concerned with a wider view of mistake under which a contract is terminable if the mistake is material or relevant. The centre-piece of this analysis has been a distinction between two kinds of mistake: on the one hand, correspondence-mistakes which are operative in their own right simply Q4 But see the recent cnticiems of Cundy v. Lindsay even on thie score: Solle v. Butcher E.B. 671; Ingram v. Little [1961] 1 Q.B. 31 at p s L.B Ingram v. Little [1961] 1 Q.B &he!mportant exemples of this are Jones v. Waring d? Gillow, Lake v. Simmons and Sowlei v. Potter, all previously referred to.

21 MAT 1965 A NEW APPROACH TO MISTAKE IN CONTRACT 285 because a party, by proving an alternative agreement or intention, thus can overcome his mistake; and, on the other hand, expectationmistakes which concern not the agreed terms but the unexpected effects of a bargain, effects often most disappointing but which the law cannot redress, apart from a few special situations which however must be put on a separate basis, that of exchange-interests. Moreover, by looking at correspondence-mistakes, relating both to subject-matter and personal identity, we can see that mistake, far from being a surplus-category (as has recently been alleged), is in fact a comprehensive doctrine, unifying a field previously divided by separate remedies; while from a viewpoint of expectation-mistakes it not only makes sense to say that a mistake can be both " fundamental " and ineffective (an assertion that is nearly self-refuting on traditional according to which a fundamental or basic error is supposed to make a contract void), expectation-mistakes also furnish a more clarifying perspective for such problem cases as Bell v. Lever and Solle v. Butcher, cases which we fully discussed. The analysis here presented also helps us with certain incidental misconceptions. Thus we no longer need the void-voidable distinc- tion, a distinction that not only suggests a false difference between mistake and innocent misrepresentation, but which gives the notion of " void " a significance it does not possess. Indeed the notion of voidness telescopes two quite disparate rules, namely, that res extincta give rise to reciprocal excuses and that a third party will acquire no title, under the doctrine of Cundy v. Lindsay. Again, we no longer need to differentiate between common and unilateral mistake: we no longer need to do this since a mistaken party will either have to prove a correspondence-mistake, where proof will depend on what the parties said 'to each other or on the terms on which they actually agreed, or where the mistaken party will have to show that he comes within certain exchange-interests that are protected independently. And, similarly, we can now dispose of the controversy between the so-called '' subjective ') and " objective ') approach. To the extent that one purpose of mistake is to protect freedom of contract or autonomy of choice, the relevant test is always subjective. To the extent, however, that the function of mistake is to protect not merely the freedom of one, but the freedom of both sides, this immediately creates an objective limitation in that a person cannot complain if a mistake, due to his own ignorance, only reveals itself after the contract is made. In this way, indeed, subjective and objective viewpoints are not the playthings of opposing schools, but become part of the very logic of the criteria informing contractual mistake. SAMUEL STOLJAR.* 98 See these assertions in Solle v. Butcher [1950] 1 K.B. 671 at p. 691; Rose v. Pim [1953] 2 Q.B. 450 at p. 460; and a180 Suanosio V. MCNQ~WQ (1956) 96 C.L.R. 186 at p ' PH.D., LL.D. ; Professorial Fellow in Law in the Australian National University in Canberra.

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