Business Law Mistake
Introduction
In the Law of Contract the phrase “mistake” & “Misrepresentation” is applied when one or both parties of a contract act under a false or mistaken understanding.
Mistake can be defined by Pendleton , Vickery (1998), [1] as; ➢ A misunderstanding regarding a fact, causing one or more parties to hold disagreeing beliefs about the foundation of a contract.
Mistakes can be made in the form of a contracts subject matter or as a mistake of identity. There are 3 different types of mistake in Contract Law. ➢ Common Mistake (Subject) ➢ Mutual Mistake (Subject) ➢ Unilateral Mistake (Identity)
Common Mistake
Were both parities are in an agreement however they are both mistaken about an important subject to the existence of the contract. The Law in this area states that if both parties of a contract are truly unaware of a mistake in a contract therefore the contract is declared void[2] for mistake. However as stated in Parker and box[3] if one party promises that a subject matter exists when it actually does not, the party so warranting cannot get out his obligations to the contract by pleading mistake, and may be liable for a breach. The case of Leaf v International Galleries [1950][4] is one example of common mistake, where it was held that there was no mistake on the subject of the contract, however mistake on the identity, which can not be a reason for making a contract void on the bases of common mistake.
Mutual Mistake
As defined by M Peters in Law of Business mutual mistake is a mistake on a fundamental fact concerning the contract. But each party has made a different mistake[5]. If mutual mistake is proven, then the agreement no longer exists the contract is made void and both parties return to their original status quo. Mutual mistake is illustrated in the case of Raffles v Wichelhaus [1864][6] where both parties were mistaken by a fundamental fact on the contract of the delivery of goods. The courts held this contract void on the
In the Law of Contract the phrase “mistake” & “Misrepresentation” is applied when one or both parties of a contract act under a false or mistaken understanding.
Mistake can be defined by Pendleton , Vickery (1998), [1] as; ➢ A misunderstanding regarding a fact, causing one or more parties to hold disagreeing beliefs about the foundation of a contract.
Mistakes can be made in the form of a contracts subject matter or as a mistake of identity. There are 3 different types of mistake in Contract Law. ➢ Common Mistake (Subject) ➢ Mutual Mistake (Subject) ➢ Unilateral Mistake (Identity)
Common Mistake
Were both parities are in an agreement however they are both mistaken about an important subject to the existence of the contract. The Law in this area states that if both parties of a contract are truly unaware of a mistake in a contract therefore the contract is declared void[2] for mistake. However as stated in Parker and box[3] if one party promises that a subject matter exists when it actually does not, the party so warranting cannot get out his obligations to the contract by pleading mistake, and may be liable for a breach. The case of Leaf v International Galleries [1950][4] is one example of common mistake, where it was held that there was no mistake on the subject of the contract, however mistake on the identity, which can not be a reason for making a contract void on the bases of common mistake.
Mutual Mistake
As defined by M Peters in Law of Business mutual mistake is a mistake on a fundamental fact concerning the contract. But each party has made a different mistake[5]. If mutual mistake is proven, then the agreement no longer exists the contract is made void and both parties return to their original status quo. Mutual mistake is illustrated in the case of Raffles v Wichelhaus [1864][6] where both parties were mistaken by a fundamental fact on the contract of the delivery of goods. The courts held this contract void on the
Bibliography: Books / Ebooks Box .G Parker.D, (2008), Business Law for Business Students (NSW: Lawbook Co.) Enright, Christopher (2006), Business Law (NSW: Branxton Press). Graw, Steven (2008), An introduction to the law of contract, ed. Lara Weeks (6th edn.; NSW: Thomson Lawbook Co.). R.Pentony, S.Graw, J.Lennard, D.Parker (2003), Understanding Business Law (NSW: LexisMexis Butterworths). Stone, Richard (2009), The Modern Law of Contract:, ed. Taylor & Francis, 728 vols. (Seventh Edition edn.; OXON USA: Rovledge - Cavendish). Wayne Pendleton , Rodger Vickery (1998), Australian Business Law, ed. Cheanne Yu (second edn., Principles and Applications NSW: Prentice Hall) 708. Peters, Micheal K (2004), 'Laws of Business ', (NSW: Law Press Asia) Journal Articles Rasmusen, Eric (1993), 'Mutual and Unilateral Mistake in Contract Law ', Journal of Legal Studies 309, 22, 3. Wright, David (1996), 'Rectification of Unilateral Mistake ', Case based journal articles, 4 (154). ----------------------- [1] Wayne Pendleton , Rodger Vickery (1998), Australian Business Law, ed [3] David Parker, Gerald Box (ed.), (2008), Business Law for Business Students (NSW: Lawbook Co.) 211 [4] 2 KB 86 [5] Peters, Micheal K (2004), 'Laws of Business ', (NSW: Law Press Asia), 175. [8] Wayne Pendleton , Rodger Vickery (1998), Australian Business Law, ed. Cheanne Yu (second edn., Principles and Applications NSW: Prentice Hall) 206. [23] Stone, Richard (2009), The Modern Law of Contract:, ed. Taylor & Francis, 728 vols. (Seventh Edition edn.; OXON USA: Rovledge - Cavendish).