Question 1

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

Accepted Answer

A contract concluded on the basis of a common mistake is typically considered void, not voidable, as the mistake undermines the very foundation of the agreement.

Question 2

Raymond agrees to sell Damian his entire potato harvest in return for &#163;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?

Accepted Answer

The contract is void due to mutual mistake. Both parties were mistaken about the existence of the subject matter of the contract (the potato harvest).

Question 3

Which of the following elements must be present in order to establish common mistake? Please select all that apply.&#10;A) There must be a common assumption as to the existence of a state of affairs which is mistaken&#10;B) Neither party has guaranteed that the state of affairs which forms the subject of the contract exists&#10;C) Fault on the part of both parties&#10;D) The common mistake must be of fundamental importance

Accepted Answer

A common mistake in contract law requires a shared incorrect assumption about a fundamental fact or state of affairs that is central to the contract. Both parties must not have guaranteed the existence of this state of affairs, and the mistake must significantly impact the contract's performance or value, making it of fundamental importance. Fault is not a necessary element for establishing common mistake, which differentiates it from other forms of contractual mistakes.

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.

Accepted Answer

The contract remains valid and is not voidable because the mistake was not related to the fundamental nature of the contract at the time of agreement, but rather to the value of the item, which does not affect the validity of the contract.

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.

Accepted Answer

When both parties to a contract are mistaken about a fundamental fact such as the ownership of the goods which form the subject of the contract, the contract is considered void due to mutual mistake. This is because the mistake goes to the root of the contract, affecting the parties' ability to genuinely consent to the agreement.

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.

Accepted Answer

A mutual mistake regarding the quality of goods does not automatically render a contract void; it may lead to voidability if the mistake significantly affects what was bargained for, but it does not inherently make the contract 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.

Accepted Answer

The answer of A asks for tenders for the renovation...

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.

Accepted Answer

The Court of Appeal is bound by the decisions of the Supreme Court, and Solle v Butcher was a decision of the Supreme Court.

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