maintain any stability in the law. The Report specifically lamented about the controversy
between Bell v Lever Bros. which was the common law position on mistake and Solle v Butcher
being the equitable position on common mistake, referring to it as a “double-standard” that the
courts had to grapple with. They argued that the doctrines contradicted each other and this
introduced “unnecessary complexity and artificiality” in the law of common mistake. They also
highlighted that the remedies in the law of common mistake were extreme and inflexible, and
that this would lead to the courts giving arbitrary judgements in order to make the case fall
within one of the limited remedies available. They also drew concern to the enormous amount of
work that attorneys and the courts have to belabour in attempting to reconcile the conflicting
precedents with its subtle differences in arriving at a conclusion. The Report went on to describe
what is a “fundamental mistake” in the following statement: “the mistake must relate to some
matter which is so important that it is in the minds of the parties at the time they contract.
Secondly, the parties themselves must not have allocated the risk of error as to that matter in
their contract. Thirdly, the error must have a significant effect on the operation of the contract.
Thus, this definition can be relied upon when the courts are interpreting the legislation as to what
is meant by a ‘fundamental mistake,’ which had not for many years been sufficiently defined by
the courts.
The Report also highlighted that in order for a mistake to be operative, it has to result not only in
the contract being different from what it was intended to be, but that it must also cause unfair
results to the contracting parties. This was not expounded in judicial precedent, but has now been
implemented in section 6 (1) (b) of the New Zealand Act. Furthermore, they emphasized that
once this type of mistake is established then the courts will have a wide discretion in
apportioning a remedy to the parties out of a much broader range of remedies available through
the legislation as is stated in section 7(3), which was not available at the common law and equity.
They also stipulated that the court should not be prevented from setting aside a contract even if
there is a lapse of time, if the court thinks that this is what is fair to both parties. Thus, lapse of
time is not included in the Act as a bar to relief. The Report also regarded protection to be given
to third parties in a contract where a mistake has accrued, unknown to the third party who was
acting in good faith in the transaction. They recognized the common law’s inadequacy in this
area of law and thought it necessary to include this in its reform, as is shown in section 8(1) of
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