🧠 Topic: Mistake in Contract Law
Source: Christine Dowuona-Hammond – The Law of Contract in Ghana
Level: Beginner-friendly, law student
Focus: Definitions, types of mistakes, key Ghanaian and common law cases, and simple
examples.
📘 1. What Is a Mistake in Contract Law?
In contract law, a mistake refers to a false belief about a fact held by one or both parties at the
time the contract was made, which may affect the validity of the agreement.
✳️Christine Dowuona-Hammond defines a mistake as a “misunderstanding or erroneous belief
by one or both parties relating to a fact existing at the time of the contract, which may affect the
enforceability of the contract.”
📚 2. Types of Mistake
(a) Common Mistake
Both parties are mistaken about the same fundamental fact.
✅ Effect: Contract is void if the mistake makes the contract impossible to perform.
🔑 Key Case: Bell v. Lever Brothers [1932]
o The parties believed there was a valid contract termination, but the employee
could’ve been fired without compensation.
o Held: No operative mistake—the contract was valid.
🧪 Example:
A and B contract to sell a horse, believing it's alive. Unknown to both, it had died the day
before. → Common mistake → Contract is void.
(b) Mutual Mistake
Each party is mistaken, but about different facts.
✅ Effect: No true agreement—contract may be void if there is no consensus ad idem
(meeting of minds).
🔑 Key Case: Raffles v. Wichelhaus (The Peerless Case)
o Two ships named Peerless. Buyer and seller referred to different ships. → No real
agreement → Contract void.
🧪 Example:
A agrees to buy “whitewood,” thinking it's pine; B thinks it's birch. If the difference is
material, the contract may be void.
(c) Unilateral Mistake
Only one party is mistaken about a fundamental aspect of the contract.
✅ Effect: Contract may be void if the mistake is known to or induced by the other party.
🔑 Key Case: Cundy v. Lindsay
o A rogue pretended to be a well-known business. Lindsay sold goods to him by
mistake. → Identity mistake → Contract void.
🔑 Ghanaian Case: Appah v. Shell Ghana Ltd.
o Mistake as to contract terms. Court held the contract valid as no fundamental
mistake existed.
🧪 Example:
A signs a contract thinking it's a job offer, but it’s actually a loan agreement. If B knew A
misunderstood the document → contract void for unilateral mistake.
📏 3. Legal Consequences of Mistake
Type of Mistake Effect on Contract
Common Void (no contract)
Mutual Void (no agreement)
Unilateral Void if mistake is fundamental and known to the other party
Christine notes that not all mistakes void a contract—only operative (fundamental) ones do.
⚖️4. Equity and Mistake
Sometimes a mistake won’t make a contract void under strict law, but equity may intervene to
rescind the contract or refuse specific performance, especially where fairness is at stake.
🔑 Example: If a seller sells land thinking it includes a building, but it does not, equity
may set aside the contract.
💡 5. Real-Life Analogy
Imagine you’re buying a phone online. Both you and the seller believe the phone is an iPhone
14, but it turns out to be an iPhone 12. This is a common mistake—you both misunderstood a
basic fact. The sale may be void.
🧠 Recap Table
Type Who is mistaken? Key Effect Case Example
Common Both parties Void Bell v. Lever Brothers
Mutual Both (different ways) Void Raffles v. Wichelhaus
Unilateral One party Possibly void Cundy v. Lindsay, Appah
📎 Bonus: Exam Tip
When answering exam questions on mistake:
1. Spot the type of mistake.
2. Apply the correct case law.
3. Assess whether it voids the contract or whether equity applies.
