1.
Mistake as to Identity
This occurs when one party mistakenly believes they are contracting with a different
person.
Legal Rule:
If the identity of the person is material to the contract, the contract is void.
If identity is not crucial, the contract is valid even if there was a mistake.
Key Case Laws:
🔹 Cundy v Lindsay (1878) (English Law)
Facts: A fraudster named Blenkarn pretended to be a well-known firm (Blenkiron &
Co.) and ordered goods. Lindsay & Co. shipped goods, believing they were dealing
with Blenkiron & Co.
Issue: Was the contract void due to mistaken identity?
Judgment: The court ruled that the contract was void because Lindsay & Co.
intended to contract with Blenkiron & Co., not Blenkarn.
🔹 Raffles v Wichelhaus (1864)
Facts: A contract was made for the shipment of goods on a ship named Peerless.
However, two ships named "Peerless" were sailing at different times.
Issue: Was there a valid agreement when the parties had different ships in mind?
Judgment: The contract was void due to a mutual mistake about identity.
🔹 Lake v Simmons (1927)
Facts: A woman falsely claimed to be the wife of a wealthy man and purchased
jewelry on credit.
Judgment: The contract was void because the seller believed they were dealing with
someone else (a rich woman).
2. Mistake as to Subject Matter
This occurs when both parties misunderstand the nature or existence of the subject
matter of the contract.
Legal Rule:
If the subject matter does not exist or both parties are mistaken about its essential
quality, the contract is void.
Key Case Laws:
🔹 Couturier v Hastie (1856) (English Law)
Facts: A contract was made to sell a cargo of corn, but unknown to both parties, the
cargo had already perished.
Issue: Was the contract still valid?
Judgment: The contract was void, as the subject matter (corn) did not exist at the
time of the contract.
🔹 Bell v Lever Bros Ltd (1932)
Facts: An executive was paid a severance package, but later, the company discovered
that he had committed misconduct that could have led to his dismissal without
payment.
Issue: Could the severance contract be voided due to mistake?
Judgment: The contract was valid because the mistake was not fundamental to the
agreement.
🔹 Wood v Scarth (1858)
Facts: A landlord leased a property, believing rent included an extra payment, but the
tenant understood only the base rent.
Judgment: The contract was void due to misunderstanding the subject matter of the
rent agreement.
3. Mistake as to the Nature of the Promise
This occurs when one or both parties misunderstand the actual obligations they are
entering into.
Legal Rule:
If a party is mistaken about what they are agreeing to, the contract may be voidable.
However, if the mistake was due to negligence, the mistaken party is still bound by
the contract.
Key Case Laws:
🔹 Foster v Mackinnon (1869) (English Law)
Facts: An elderly man was tricked into signing a promissory note, believing it was a
different document.
Issue: Was the contract binding if he was mistaken about what he was signing?
Judgment: The court ruled that the contract was void because he did not intend to
sign a financial instrument.
🔹 Hartog v Colin & Shields (1939)
Facts: A seller mistakenly quoted the wrong price for hare skins.
Issue: Could the buyer enforce the contract despite knowing it was a mistake?
Judgment: The court ruled that the contract was void, as the buyer should have
realized the mistake.
🔹 Solle v Butcher (1950)
Facts: A lease was signed with both parties mistakenly believing rent control laws
applied.
Judgment: The contract was voidable due to mistake of law affecting the promise.
