Is Legislative intervention the solution to the controversy surrounding the Great Peace
decision, on the law of common mistake?
By Grace Lucy-Anna Bhagwandeen
INTRODUCTION
Mistake in contract law involves three distinct categories, common mistake, unilateral mistake
and mutual mistake. They are each defined differently, and have diverse effects on the
subsistence of a contract, as to the circumstances in which the contract can be declared void or
voidable. A common mistake is defined as a situation in which both parties make the same
mistake as to a fundamental element in the contract. A mutual mistake occurs where both parties
misunderstand each other’s intentions and are at cross-purposes. A unilateral mistake occurs
when one party is mistaken in the contract. However, the law of common mistake has proven to
be one of the most controversial and intricate premises of mistake. This is due to the myriad of
conflicting precedent that has evolved in this area, with differing principles of law and equity,
providing an excellent area of analysis and debate. This paper seeks to achieve the following
objectives. First, to identify the settled areas of the law on common mistake. Second to analyse
the unsettled and controversial area of the law on common mistake prior to the Great Peace
decision. Third, to demonstrate how the Great Peace decision exacerbated this controversy.
Fourth to criticize the present law of common mistake in the various jurisdictions. Fifth, to
postulate the theory that legislative intervention is the answer to settling the controversy
surrounding the Great Peace decision, on the law of common mistake, specifically with
reference to the Contractual Mistakes Act of New Zealand 1977.
The law of common mistake was governed by both common law and equity, each administering
diverse rules and remedies, and accordingly a series of precedent has developed to support both
theories. There are three categories of common mistake including, common mistake as to the
existence of the subject matter of the agreement, common mistake as to the possibility of
performing the contract, and common mistake as to the quality of the contract. The law was
settled in the first two categories of common mistake, however the third category presented
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