If the contract is void at law on the ground of a mutual mistake, equity "follows the law" and specific performance will be refused and the contract will be rescinded in some situations. However, if to grant specific performance would cause hardship, it will be refused. Where in Wood v. Scarth (1858), the remedy of specific performance was refused. The final type is the Unilateral Mistake, unlike the mutual mistake, here only one party is fundamentally mistaken concerning the contract and the other party is aware of the mistake, or sometimes they may be taken to be aware of it.
The mistake by one party must be as to the terms of the contract itself, in order to made the unilateral mistake to be operative; Hartog v. Colin and Shields12. On the other hand, a mere error of judgment as to the quality of the subject-matter will not suffice to render the contract void for unilateral mistake; this was applied in Smith v. Hughes13. The unilateral mistake in equity is just same as the mutual mistake, as in Webster v. Cecil14.
The defendant had intended to write the price as 2,250 but in fact wrote 1,250 instead. It was held that the mistake was operative and specific performance would be refused. One of the parties is mistaken as to the identity of the other party, in certain circumstances the contract may be void at common law. Almost all the decided cases of operative mistake in this area are in fact instances of unilateral mistake. There are certain conditions must apply in order for the contract to be void. This first one is that the identity of the other party must be of crucial importance.
Little15, elder ladies advertised their car for sale. A rogue, calling himself P. G. M. Hutchinson offered to buy the car, he paid by a cheque which was worthless and the rogue disposed of the car to the defendant, who took the car in good faith. It was held that the contract between the plaintiffs and the rogue was void for mistake. However, in Lewis v. Averay16, similar material facts, the Court of Appeal held that the contract, though voidable, was not void. The relationship between the above two cases is an uneasy one.
It is at least clear that the prima facie presumption is that a party intends to contract with the person in front of him, but what is not quite clear is that the factors that will lead a court to conclude that the presumption has been rebutted. Faced with the difficulty of distinguishing between these cases there is a temptation simply to conclude that each case must be decided on its own facts. The next condition which needs to be applied is that, the mistaken party must have in mind an identifiable person with whom he or she intends to contract.
And the final one is called Caveat Emptor, which means the buyer must be aware of the mistake himself. Mistake in the law of contract is a very important part as it may arise at any time when making a contract. Being aware of the mistake can avoid lots of unwanted loss in the contract.
1 Per Scrutton LJ in L'Estrange v. F. Graucob Ltd. (1934) 2 KB 394 (Divisional Court) 2 'Non Est Factum' means not my deed, it is not my act. 3 Howatson v. Webb (1907) 1 Ch. 537, Ch D 4 Saunders v. Anglia Building Society (formerly Northampton Town and County Building Society) (1971) A. C. 1004 5 Couturier v. Hastie (1856) 5 H. L. Cas. 673