10. Mistake

Mistake here means a misapprehension of fact at the time of the agreement, not a bad prediction about the future, and not a mistake about the law in the old narrow sense that is sometimes still used.

Common mistake: both parties share the same error. Mutual mistake: they are at cross purposes. Alpha thinks the contract is for one car, Fatu thinks it is for another, and neither meaning is the more reasonable. Unilateral mistake: only one party is mistaken, and the other knows or ought to know.

The mistakes that matter are these.

Where both parties think the subject matter exists and it does not, the contract is void. Scott v Coulson, and the older Strickland v Turner, are the illustrations: you cannot buy a life that has already dropped. A common mistake about a fact that goes to the root of the deal can have the same effect. Bell v Lever Brothers is the strict case. A generous settlement with a director was not void merely because, unknown to both sides, he could have been dismissed for breach of duty. The mistake must make the thing contracted for essentially different.

Mutual mistake about the identity of the subject matter: Raffles v Wichelhaus, the two ships both called Peerless. There was no agreement on which cargo was sold. The contract was void.

Unilateral mistake about the terms, known to the other party, can also prevent a contract. If you snap up an offer you know is a slip, you cannot hold the other person to it. A mistake only about the quality or value of what you are buying, which the other party does not know of, does not. You are bound by the objective meaning of what you signed, unless the other side knew you were mistaken about the terms, or unless non est factum applies. Gallie v Lee (Saunders v Anglia Building Society) keeps non est factum for a person who signed a document of a wholly different kind, without carelessness.

The effect, where the doctrine applies, is that there is no contract. Contrast that with misrepresentation, which usually makes the contract voidable, not void.