The Great Peace Case
Before continuing on the discussion on common mistake, it is important to understand The Great Peace case. In this case, the defendants, Tsavliris Salvage International Ltd, were a company that offered salvaging facilities to ships in the South Indian Ocean that needed assistance. A ship called the Cape Providence required help after it had endured structural damage at sea. The defendants looked for any merchant vessels that were nearby to assist them. The complainants, Great Peace Shipping Ltd, said they were the closest to the ship, being around 30 miles away. On this information, the defendants commissioned the complainants to help the ship. In fact, this was a mistake and the complainants were around 400 miles away from the ship. Since the Cape Providence was in desperate need of help, as it was sinking, the defendants cancelled the contract with the complainants and asked another ship for assistance.
The claimant had sued for their contract fee with the defendants. The defendants argued that the distance from the Cape Providence was a common mistake and this would invalidate the contract that they had for providing assistance. The issue in this case was whether this was a common mistake and if it could void the contract.
It was held that this was not a common mistake that would void the contract between the complainant and defendant. It was a matter of quality of the performance of the contract. The miles did not matter and it did not make the contract impossible to perform. A common mistake requires an element to make contract performance impossible and mileage was not fundamental enough to render the contract void.
Law on common mistake after The Great Peace case becomes clear and certain because it has been categorised into res extincta, res sua and mistake as to quality. It is clear that for a contract to be void due to common mistake, a common mistake requires an element to make contract performance impossible. Clear cases are given along with each of the category so they can be applied accordingly.
The law of contract often seeks to strike a balance between competing concerns, such as the desire to uphold certainty in contracts, which contrasts with the desire to protect a party who has entered into a bad bargain as a result of fraudulent misrepresentation. In relation to mistake this principle remains unchanged. While the law wants to ensure certainty it also wishes to ensure that most play by the rules. It other words the law intends to be a fair as possible to both parties.
For mistake to be a catalyst for the contract to be void it must fundamentally change the contract meaning the contract no longer resembles the one that parties signed at the beginning. Examples of these the case of Cooper v Phibbs (1867) where party A wanted to buy a boat from party C only to realised that he already owned the boat.
A common mistake is one where the contracting parties make a fundamental error on an important fact that as stated above fundamentally change the contract from the one agreed earlier. They are broken down to separate versions:
- a) Rex Extincta
- b) Res Sua
- c) Mistake As To Quality
The contract is void if the subject matter of the contract does not exist or has perished at the time the contract has been made. Example of such events are Griffith v Brymer (1903) where the claimant booked a room on the hotel with the intention to use it to witness the coronation procession of the King. However this was no longer possible as the procession was cancelled due the King’s poor health. As you can see the contract “booking the room to see the King procession” would be fundamentally change to just “booking a room for no reason”.
However if the party should had been more careful in providing a service or requesting a service they did not give due regard to for example hiring a vassal to rescue another vassal that is presumed to be in peril based on rumours alone this may be breach of contract if the hiring party did not pay McRae v The Commonwealth Disposals Commission (1950). For example, if the claimant at Griffith v Brymer (1903) had the same intention but he had been mistaken of the date of procession as he did not check the official date or that the procession even existed.
Res sua is perhaps simply explained as the owner of the property mistakenly purchased his own property by mistake. This has already been illustrated earlier in the case of Copper. It is a very simple principle you cannot buy your own property also you cannot buy ownership of a property or pay a tenancy to someone who does not own the property.
Mistake As To Quality
A mistake as to the quality of the subject matter of a contract has been confined to very narrow limits. According to Lord Atkin: 'A mistake will not affect assent unless it is the mistake of both parties, and is as to the existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be.'
In cases since Bell v Lever Bros the courts have not been over-ready to find a mistake as to quality to be operative. A funny example is that you bought a robot thinking it can read, you understand read as normal reading as in reading a book to child but the seller thought you meant reading codes to which in both minds you have a different meaning or reading.
Where a contract is void for identical mistake, the court exercising its equitable jurisdiction, can: Refuse specific performance; rescind any contractual document between the parties; and impose terms between the parties, in order to do justice. Cooper v Phibbs (1867). Rescission for mistake is subject to the same bars as rescission.
Calls For Reform (The Great Peace)
The Court of Appeal has resisted attempts to implement a more equitable approach to laws within common mistake, Great Peace Shipping Ltd v Tsavliris (International) Ltd. Stating that it lacks definitive authority and would lead to uncertainty in contract law. Instead they proposed a reform in terms of flexibility in remedies allowing the court to perhaps be allowed more remedial options such as demanding one party to pay damages or perhaps for mistake to be merely voidable for the contract instead of it being absolutely void.
However the courts have no implemented this obiter dicta statements and seemed to lack the willpower to do it. Understandably so as this would change the nature of common mistake a fair deal and may seek Parliament to legislate on the matter.
I hereby submit that according to English law you may void a contract through common by 3 different methods by res extincta (the non-existence of a material subject matter), res sua (buying what is already yours) and mistake to quality which means the mistake of quality was so fundamental that it change the nature of the contract.
In conclusion, it can be seen that after The Great Peace case, the law on common mistake has become clear and certain by categorising common mistake into res extincta, res sue and mistake as to quality. A common mistake is one where the contracting parties make a fundamental error on an important fact that as stated above fundamentally change the contract from the one agreed earlier. Under res extincta, a contract will be void at common law if the subject matter of the agreement is, in fact, non-existent. For res sua, where a person makes a contract to purchase that which, in fact, belongs to him, the contract is void. A mistake as to the quality of the subject matter of a contract has been confined to very narrow limits. According to Lord Atkin: 'A mistake will not affect assent unless it is the mistake of both parties, and is as to the existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be. In reference to above, it is clear that the law on common mistake has become clear and certain after The Great Peace case.