One writer commenting on this case stated, “the plaintiffs had obtained exactly what they had
bargained for, that is, the release of the contract with the defendant. The fact that the plaintiffs
could have achieved the same result without paying compensation by relying on the defendant’s
earlier conduct was immaterial.”84 While the logic of Richard Stone’s argument is valid in this
respect, the law guiding this decision in Bell, especially with regards to Lord Atkin’s judgement
was quite unclear, immensely subjective and offers no clear guidance on how to approach this
area of law in future cases.
However, the decision in Bell can be contrasted with the decision in Associated Japanese Bank
Ltd. v Credit du Nord SA85. In this case, the plaintiff bank bought four machines from the
defendant for £1,021,000. The bank then leased the machines back to the defendant, who had
obligations to make payments to the bank. These obligations were guaranteed by the defendant
bank. The defendant was unable to keep up the payments, and the plaintiff sought to enforce the
guarantee against the plaintiff. Subsequently it was realized that the machines never existed.
Steyn J. stated that “For both parties, the guarantee of obligations under a lease with nonexistent machines was essentially different from a guarantee of a lease with four machines which
both parties at the time of the contract believed it to exist.”86Thus, in this case, the court found
that a mistake as to the quality of the contract was fundamental enough to cause the contract to
be void at common law.
Thus, the common law was approaching the idea of a common mistake as to the quality of the
contract in a conflicting manner. In Bell, the mistake in the contract was one which, as some
would argue made the contract ‘essentially different’ from what the parties had intended it to be.
However it was in fact viewed by the court as an unfortunate situation that didn’t change the
substance of the contract and thus they concluded that the contract should be valid. The courts
made it clear that their job did not permit them to get involved into business transactions and
implying terms into a contract that the parties had not intended to be inserted into their contracts.
The court explained that they were not there to give business efficacy to contractual agreements.
On the contrary when we look at Associated Japanese Bank, (one of the exceptional cases in the
area of mistake as to quality), the courts approached the same theory from a different angle, and
84
th
Richard Stone, The Modern Law Of Contract (8 edn, Routledge 2009), pg 390
[1988] 3 All ER 902
86
Ibid, p 913
85
65