Mistake

In contract law a mistake or error may affect the validity of a contract.

If a mistake affects the validity of a contract it is said to be an 'operative mistake'.  The mistake operates so as to make the contract void.  The contract is usually said to be void ab initio (from the beginning). 

Such a contract is of no effect and cannot be relied upon.  In particular no property can pass under such a contract and no obligations or benefits exist.  The fact that common law recognises the contract as valid is not necessarily the end of the matter, in that the contract may be voidable in equity on the ground of mistake.  The contract will remain valid unless and until avoided by the injured party and property will pass and obligations and liabilities will arise.  However the right to rescind the contract may be lost, for example, due to delay.

In order that the mistake operates to make the contract void the mistake must be about something which touches and concerns the heart of the contract.  In Couturier v Hastie (1866) the subject matter of the contract corn did not exist.  The corn was sold while in transit by sea from Salonica to England.  Unknown to both parties to the contract, the ship's captain had in fact disposed of the corn at Tunis. This mistake as to the existence of the subject matter led the House of Lords to declare that the contract was void.

 

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