TRN305Y1 Lecture Notes - Lecture 2: Meeting Of The Minds, Constructive Notice, British United Shoe Machinery
28 Feb 2018
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Thursday, November 3, 2016
1
Mistake, Misrepresentation, and Illegality
Introduction
- These are analogous to defences in torts: even if you have offer, acceptance, and
consideration is there another reason why this contract should fall apart?
- Sometimes contracts are void from the beginning; sometimes they are partly voided;
sometimes they are in theory a good contract except it is voidable on the option of one
of the parties; and then there are situations in which a good contract is decided not to
be enforceable by the Courts.
• These make a contract vulnerable to one of the remedies (to be discussed later).
Mistake: Bilateral or Unilateral?
- The first of the reasons why is mistake. There are three relevant kinds herein: the
mistake about the terms of the contact (i.e. mistake about
offer/acceptance/consideration); you are talking about totally different matters (e.g. you
are contracting about one painting and the other party thinks it is another); the parties
together may be contacting about something that doesn't exist anymore.
- The law wants there to be some certainty with contracts and they want people to take
proper care. They also don't want to simply let people off the hook for mistakes.
- The whole idea about contacts is the meeting of the minds. If there really isn’t, though,
then there is not a valid contact.
- One of the first thing the law looks at is whether it is bilateral or unilateral. A bilateral
mistake is if you are selling something that you think is genuine and the accepting party
thinks it is genuine but it is not and you are both mistaken. The law looks at the
underlying intention of the parties and whether it has been foiled with the caveat that
we look at these objectively.
• Walton v. Landstock Investments Ltd: Mutual assent is not required. You must look
at what a reasonable person would think they were contracting about.
- There has to be reasonable grounds for that mistake.
find more resources at oneclass.com
find more resources at oneclass.com
Thursday, November 3, 2016
2
• Sinnot v. Amaria: If their intentions in the eyes of the law seem clear then it is a good
contract. If on its face the terms are ambiguous, then the contract is vulnerable.
- Bilateral mistakes are often harsh for the buyer, but one of the underlying key points is
that when the Court is looking at it he looks from the reasonable, detached standard.
• If you both agree to buying and selling a genuine painting and it is not genuine, but
the terms about the genuineness are clear, the contract is still valid.
- Unilateral mistakes look different. The question is did the other party know and take
advantage of that mistake?
• First City Capital Ltd. V. BC Building Corp, Nfld. Liquor Corp. v. NAPE
- The Court does not allow people to take advantage.
• If one party makes a mistake that only they know about and the other party has no
reason to think that they are mistaken, the contract is valid. If they knew or should
have known, then it is vulnerable.
• Constructive notice of error: When a reasonable person would have cause to know
about a mistake or have cause to look into it.
- Hartog v. Colin & Shields: The person making the agreement must have known
that there was a mistake because of the very low price.
• With bilateral mistakes the court is objective; in unilateral, it is not. If one party could
show that the other party knew or ought to have known that they made a mistake,
the Court will look into what was actually in your head.
- The Court will consider what your mistake was, whereas in bilateral contracts it
just looks at the reasonable person and not what was in your head.
Mistake: What was the Mistake About?
- Mistake as to the identity of a party: This used to render a contract void (Lewis v.
Averay) but now it does not (Hector v. Lyons), it hinges on a fundamental or non-
fundamental mistake of identity
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
The first of the reasons why is mistake. The law wants there to be some certainty with contracts and they want people to take proper care. They also don"t want to simply let people off the hook for mistakes. The whole idea about contacts is the meeting of the minds. If there really isn"t, though, then there is not a valid contact. One of the first thing the law looks at is whether it is bilateral or unilateral. A bilateral mistake is if you are selling something that you think is genuine and the accepting party thinks it is genuine but it is not and you are both mistaken. The law looks at the underlying intention of the parties and whether it has been foiled with the caveat that we look at these objectively: walton v. landstock investments ltd: mutual assent is not required. You must look at what a reasonable person would think they were contracting about.
