ASSIGNMENT NO.
5
Answer to Q.1
Mistake in Contract Law:-
A mistake in contract law refers to an erroneous belief held by one or both parties at the time of contract
formation, concerning a basic assumption on which the contract is made. This can affect the validity of the
contract.
Types of Mistakes:
1. Unilateral Mistake: When only one party is mistaken about a fundamental aspect of the contract.
Generally, a unilateral mistake does not void a contract unless the non-mistaken party knew or should
have known about the mistake.
Smith v. Hughes (1871), it was held that a unilateral mistake concerning the quality of the subject matter,
without any misrepresentation by the seller, does not void the contract.
2. Mutual Mistake: When both parties share a common but incorrect belief about a vital fact at the time of
contract formation.
A mutual mistake can render a contract voidable if the mistake significantly impacts the agreed-upon
terms.
Raffles v. Wichelhaus (1864) involved a contract for the sale of goods where both parties were mistaken
about the identity of the ship, leading to the contract being voided.
3. Common Mistake: When both parties make the same mistake regarding a fundamental fact.
A common mistake can make a contract void if the mistake pertains to the very essence of what was
agreed upon.
Bell v. Lever Brothers Ltd. (1932) ruled that a common mistake must be about something essential to
the contract for it to be void.
Remedies for Breach of Contract Due to Mistake:
1. Rescission: The contract is canceled, and both parties are restored to their pre-contract positions.
Typically available for mutual and common mistakes that fundamentally affect the agreement.
2. Rectification: The written terms of the contract are amended to reflect what was originally intended. It
is used when a written contract does not accurately reflect the true agreement due to a mistake.
3. Damages: Monetary compensation for losses incurred due to the mistake. Generally available for
unilateral mistakes where one party may have acted fraudulently or negligently.
Mistakes in contract law can significantly impact the enforceability of an agreement. Understanding the types
of mistakes and the associated doctrines helps in identifying the appropriate remedies. Rescission, rectification,
and damages are common remedies that ensure fairness and restore parties to their original positions, as
highlighted by relevant case law.
SYED SHARIQ HASSAN (PGD BATCH VIII)
