Lord Denning’s judgment, the following points can be deduced. First, the primary reason for the
development of these equitable rules was to relieve the injustices caused by the common law, in
cases where there was a common mistake present, but it was not sufficiently fundamental to have
declared the contract as void. Secondly, a contract will be declared as voidable if the parties were
under a common misapprehension either as to facts or as to their respective rights, as long as it is
satisfied that the misapprehension was fundamental and that the party seeking to set it aside was
not at fault. Thirdly, the courts will only apply this principle provided that it does not cause
injustice to third parties in the contract.
The case of Bell applied the common law test which was very difficult to satisfy and somewhat
callous to parties to a contract. In this case, the courts took a hands-off approach to the idea of
common mistake as to the quality of a contract, stressing on the importance of maintaining the
commercial relationship between the parties in achieving exactly what they bargained for,
despite its unfairness to the parties. On the other hand, in Solle, the equitable doctrine was being
developed by Denning LJ, attempting to relieve the injustices of the common law, and setting out
some guidelines as to when equity can declare a contract voidable. In Solle, it is observed that
the courts are taking a more hands-on approach to commercial transactions between parties, in
direct contradiction to the common law approach. While one can commend the courts of equity
for seeking to afford some protection to innocent parties in a contract, the reality is that the law
on common mistake has become even more complex, now with the existence of two
contradictory areas of law, each applying different principles based on the facts of every given
case. What is even more puzzling is the fact that both the common law and the equitable tests
include this common feature: “the mistake/misapprehension must be fundamental,” and we’re
still in the dark as to what exactly is meant by ‘fundamental.’
Thus, the law of common mistake was clearly unsettled as is seen from the conflicting cases of
Bell and Solle. The issue is, that Great Peace in an attempt to end to this controversy in common
mistake between Bell and Solle, made matters even worse, and ultimately exacerbated the
controversy. The decision of Great Peace Shipping v Tsalviris Ltd. will now be examined to
illustrate this point.
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