Fundamental Mistake Needed to Allow Rescission
The court set out the circumstances in which the equitable remedy of rescission of a contract is available for mutual mistake. The mistake has to be as to some fundamental element of the contract. What is ‘fundamental’ is a wider category of event than would make a contract void at common law. In the case of unilateral mistake, Lord Denning MR said: ‘It is now clear that a contract will be set aside if the mistake of the one party has been induced by a material misrepresentation of the other, even though it was not fraudulent or fundamental; or if one party, knowing that the other is mistaken about the terms of an offer, or the identity of a person by whom it is made, lets him remain under his delusion and concludes a contract on the mistaken terms instead of pointing out the mistake.’
In the case of a common mistake: ‘A contract is also liable in equity to be set aside if the parties were under a common misapprehension either as to the facts or as to their relative rights, provided that the misapprehension was fundamental and that the party seeking to set it aside was not himself at fault.’
Lord Denning MR
[1950] 1 KB 671, [1949] 2 All ER 1107
England and Wales
Citing:
Criticised – Sowler v Potter 1939
The defendant had been convicted of an offence of permitting disorderly conduct in a cafe, under her proper name of Ann Robinson. She then assumed the name of Ann Potter. The plaintiff’s evidence was that, if he had known that she was Ann Robinson, . .
Cited by:
Cited – J S Bloor (Measham) Ltd v Eric Myles Calcott ChD 23-Nov-2001
The tenant had claimed a tenancy under the Act. The landlord sought to assert a proprietary estoppel against them. There was nothing in the 1986 Act to stop the claimants relying on a proprietary estoppel and asserting their claims to occupation. . .
Overruled – Great Peace Shipping Ltd v Tsavliris (International) Ltd CA 14-Oct-2002
The parties contracted for the hire of a ship. They were each under a mistaken impression as to its position, and a penalty became payable. The hirer claimed that the equitable doctrine of mutual mistake should forgive him liability.
Held: . .
Cited – William Sindall Plc v Cambridgeshire County Council CA 21-May-1993
Land was bought for development, but the purchaser later discovered a sewage pipe which very substantially limited its development potential. The existence of the pipe had not been disclosed on the sale, being unknown to the seller.
Held: . .
Not followed – Islington v Uckac and Another CA 30-Mar-2006
The council’s tenant had unlawfully secured assignment of a secure tenancy to the defendant. The council sought possession.
Held: A secure tenancy granted by an authority pursuant to a misrepresentation by the tenant is nonetheless valid. The . .
Cited – Harlingdon and Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd CA 15-Dec-1989
The defendant auctioneer sold a painting to the plaintiff which turned out to be a forgery. The plaintiff appealed against a finding that it had not relied upon the attribution, saying that there had been a breach of the requirement that the paintig . .
Cited – Leaf v International Galleries (a Firm) CA 1-Mar-1950
In 1944, the plaintiff had purchased a picture of Salisbury Cathedral from the defendant. By innocent misrepresentation, he was told that it was by Constable, and only learned of the error when he set out to sell it five years later.
Held: On . .
Lists of cited by and citing cases may be incomplete.
Equity, Contract
Leading Case
Updated: 09 November 2021; Ref: scu.183054