SETTLED AREA OF THE LAW ON COMMON MISTAKE
There are three categories of common mistake at law:
(a) Common mistake as to the existence of the subject matter of the agreement
(b) Common mistake as to the possibility of performing the contract
(c) Common mistake as to the quality of the contract
The cases have shown that the courts are more willing to label a mistake as ‘fundamental,’ and
consequently declare the contract as void, when the mistake is related to: (a) the existence of the
subject matter of the agreement; and (b) the possibility of performing the contract.
(a) Common mistake as to the existence of the subject matter of the agreement
These scenarios are usually called cases of res extincta, which means that if it is unknown to the
parties that the specific subject matter of the agreement is non-existent, then no contract arises.
This was the case in Courtier v Hastie79, where the contract was for the sale of cargo from
Salonica to the United Kingdom. However, unknown to the parties, the cargo’s goods had
become fermented and sold to another buyer on route. It was held that the original buyer was not
liable for the price of the cargo. This was due to the fact that the common mistake was seen as
fundamental, since it was as to the very nature of the agreement and the contract was considered
void at law.
(b) Common mistake as to the possibility of performing the contract
If the parties to a contract make a shared mistake as to the possibility of performing the contract,
then this usually suffices to declare a contract as void. It may result from a physical, legal or
commercial impossibility. A physical impossibility was seen in Sheikh Bros. v Oschner 80 where
the land being the subject matter of the agreement was physically unable to yield the amount of
produce that both parties mistakenly expected it to yield, and thus the contract was held to be
void. A legal impossibility was found in the case of Cooper v Phibbs81 where one party (A)
agreed to take a lease of a fishery from the other party (B), although unknown to both parties, it
79
(1856) 5 HL Cas 673, 10 ER 1065
[1957] AC 136
81
(1867) LR 2 HL 149
80
62