Deck 21: Common Mistake: Contracts Void for Failure of a Basic Contractual Assumption

Question 1

A contract concluded on the basis of a common mistake may be voidable.

Answer 1

False

Question 2

Raymond agrees to sell Damian his entire potato harvest in return for £1000 upon their return from a holiday. Unbeknownst to either party, Raymond's potato farm has been devastated by disease and there are only a handful of healthy potatoes left at the time the contract is made. Damian believes he is nevertheless bound to pay the full price for the miserable harvest. Is this true?

Answer 2

True

Question 3

Which of the following elements must be present in order to establish common mistake? Please select all that apply.

A) There must be a common assumption as to the existence of a state of affairs which is mistaken
B) Neither party has guaranteed that the state of affairs which forms the subject of the contract exists
C) Fault on the part of both parties
D) The common mistake must be of fundamental importance

Answer 3

A,B,D

Question 4

A sells an old vase to B and both parties believe that it is nothing special. B subsequently discovers that the vase is a precious antique from China and worth millions. What is the effect of this discovery on the contract?

A) The contract is now void for common mistake.
B) The contract is now voidable for common mistake.
C) The contract remains valid and is not voidable.
D) None of the options given is correct.

Question 5

If both parties to a contract are mistaken about the ownership of the goods which form the subject of the contract, it is void.

Question 6

If both parties to a contract are mistaken about the quality of the goods which form the subject of the contract, it is void.

Question 7

A asks for tenders for the renovation of a houseboat. B makes the successful tender and begins to incur expenditure in anticipation of the renovation job. Unbeknownst to both A and B, the houseboat sank without a trace before they had contracted. Which of the following outcomes is likely?

A) The contract will be void for common mistake.
B) A will be treated as having promised that the houseboat existed, so B can sue for breach of contract.
C) The contract will be voidable for common mistake.
D) None of the options given are correct.

Question 8

As a matter of precedent, the Court of Appeal in The Great Peace should not have been able to depart from Solle v Butcher.