Page 58 - DCOM103_COMMERCIAL_LAW

Unit 5: Free Consent

(i) Mistake as to the existence of the subject-matter. If both the parties believe the subject-matter of the Notes
contract to be in existence, which in fact at the time of the contract is non-existent, the contract
is void.

Examples. (a) A agreed to sell a cargo of corn supposed at the time of the contract to be
in transit from Salonica to the United Kingdom. Unknown to the parties, the corn had become
fermented and had already been sold by the master of the ship at Tunis. Held, the agreement was
void and the buyer was not liable for the price [Couturier v. Hastie, (1856) 5 H.L.e. 673].

(b) A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the
bargain, though neither party was aware of the fact. The agreement is void.
(ii) Mistake as to the identity of the subject-matter. It usually arises where one party intends to deal
in one thing and the other intends to deal in another.

Examples. (a) W agreed to buy from R a cargo of cotton “to arrive ex-peerless from
Bombay”. There were two ships of that name sailing from Bombay, one sailing in October and
the other in December. W meant the former ship but R meant the latter. Held, there was a mutual
or a bilateral mistake and there was no contract [Raf es v. Wichelhaus, (1864) 2 H. and C.906].
(b) In an auction sale, the auctioneer was selling tow. A’bid for a lot, thinking it was hemp.

The bid was extravagant for tow, but reasonable for hemp. Held, there was no contract [Scriven
Bros. & Co. v. Handley Co., (1913) 3 KB. 564].
The result is the same even if the mistake was caused by the negligence of a third party.
Example. A who inspected fi fty rifl es in B’s shop inquired from him the price of the rifl es.

Later, he wired B, “Send three rifl es”. By mistake of the telegraph clerk the message transmitted

to B was “Send the rifl es”. B sent fi fty rifl es. A, however, accepted three rifles and sent back the
rest. Held, there was no contract. But A had to pay for the three rifles on the basis of an implied

contract [Henkel v. Pape, (1807) L.R. 6 Ex. 7].
(iii) Mistake as to the quality of the subject-matter. If the. subject-matter is something essentially
different from what the parties thought it to be the agreement is void.
2. Mistake as to the possibility of the performing the contract: Consent is nulliefied if both

the parties believe that an agreement is capable of being performed when in fact this is not the
case(sec.56,para1) the agreement , in such case, is void on the ground of impossibility .
There is a unilateral mistake where only one party to a contract is under a mistake as to a matter
of fact. Generally speaking, such a contract is not invalid. Thus, where a person due to his own
negligence or lack of reasonable care does not ascertain what he is contracting about, he must
bear the consequences.

Example: A Sold rice to B by sample, and B thinking that they were old rice, purchased
them. In fact, the rice were new. B cannot avoid the contract.
A unilateral mistake is generally not allowed as a defence in avoiding a contract. But in certain
cases, the consent is given by a party under an error or mistake which is so fundamental as goes
to the root of the agreement. In such cases the agreement is void. Thus in the following cases,
even though there is a unilateral mistake, the agreement is void.

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