Unilateral Mistakes and Contracts.
TITLE
Unilateral mistakes seldom invalidate contracts. Discuss the impact of unilateral mistakes on the parties to a contract and assess the accuracy of the statement above.
ESSAY
Title: Impact of Unilateral Mistakes on Contracts in English Legal System
Introduction:
In the English legal system, the general principle is that mistakes do not typically invalidate contracts, as parties are expected to exercise due care when entering into agreements to ensure that their consent is not unduly influenced by error. However, certain types of mistakes, such as fundamental unilateral mistakes, can render a contract void if they undermine the true consent of the parties. This essay will evaluate the impact of unilateral mistakes on the parties to a contract and assess the accuracy of the statement that unilateral mistakes seldom invalidate contracts. While the focus will be on unilateral mistakes, reference will also be made to common and mutual mistakes to provide a comprehensive analysis.
Unilateral Mistakes:
Unilateral mistakes occur when one party is mistaken regarding a material aspect of the contract, which is not shared by the other party. In order for a unilateral mistake to render a contract void, it must be established that the mistaken party intended to contract with a specific individual and would not have done so if the true identity of the other party had been known (Phillips v Brooks, Lewis v Avery). This highlights the significance of the identity of the contracting party in the formation of the agreement.
Case Law and Fraudulent Misrepresentation:
In cases such as Cundy v Lindsay, King's Norton Metal Co v Edridge Merrett & Co, and Shogun Finance v Hudson, it has been demonstrated that unilateral mistakes often arise as a result of fraudulent misrepresentations of identity in face💥to💥face transactions. When a party is induced to contract based on a false identity presented by the other party, it can lead to a situation where there is no true consensus ad idem, thus rendering the contract voidable.
Voidability vs. Voidness:
It is important to note that while a unilateral mistake induced by fraudulent misrepresentation can make a contract voidable, rendering it susceptible to being rescinded by the mistaken party, in order to render a contract void and invalidate any transfer of voidable title, a fundamental and operative mistake must be established. This distinction is crucial in determining the legal consequences of unilateral mistakes on contracts.
Assessment of Statement:
Although unilateral mistakes may not commonly invalidate contracts, the cases of fraudulent misrepresentation of identity demonstrate that such mistakes can indeed have a significant impact on the formation of agreements. The principle that parties should take care to ensure the accuracy of their consent remains fundamental, and unilateral mistakes that go to the core of the agreement, such as identity, can ultimately render a contract voidable or void.
Conclusion:
In conclusion, unilateral mistakes play a crucial role in contract law, particularly when they involve fundamental aspects such as the identity of the contracting parties. While unilateral mistakes may not always invalidate contracts, they can have serious implications on the validity and enforceability of agreements. It is essential for parties to exercise caution and diligence in contract negotiations to avoid the risks associated with unilateral mistakes.
SUBJECT
LAW
PAPER
A level and AS level
NOTES
Unilateral mistakes seldom invalidate contracts.
Candidates should introduce their response by stating that mistakes do not generally invalidate contracts as both parties are expected to take sufficient care when entering into a contract that their consent to the eventual agreement is not induced by their error. However, candidates should point out that a fundamental mistake can render the contract void if it undermines the consent of the parties such that there is no true consensus ad idem.
The question posed asks for focus on unilateral mistake, but some credit will be given for mentioning the other types of operative mistake (common and mutual mistakes). Candidates should indicate that unilateral mistake is only operative if one party intends to contract with a particular person and would not have contracted with the other party concerned had his or her true identity been known; in other words, the identity of the other party must have been of material importance to the formation of the contract (Phillips v Brooks, Lewis v Avery).
Case law suggests that this generally happens as a consequence of fraudulent misrepresentation of identity in face to face situations (Cundy v Lindsay, King’s Norton Metal Co v Edridge Merrett & Co, Shogun Finance v Hudson). Candidates should explain that such misrepresentation would only render a contract voidable and that to render the contract void (and thus render any transfer of a voidable title void) a fundamental and operative mistake needs to be established.