TUTORIAL QUESTIONS

TOPIC 10 VOID CONTRACTS,

VOIDABLE AND
UNENFORCEABLE CONTRACT
Group Members : Syafinaz Idrus, Nurul Syaqira, Nur Iman Syuhada, Raja
Shahirah, Syafiqa Alissa

DIRECT QUESTION 1
(UITM/JAN 2013/LAW436/Q5)
Distinguish between common, mutual and unilateral
mistake.
.
(6
Marks)

DEFINITION OF MISTAKE
A mistake is an error in understanding facts, meaning of words or the law,
which causes one party or both parties to enter into a contract without
understanding the responsibilities or outcomes. Such a mistake may entitle
one party or both parties to a rescission of the contract.

Section 21 of Contracts Act 1950:

Where both the parties to an agreement are under a mistake as to a
matter of fact essential to the agreement, the agreement is void.
This section explains, a wrong opinion as to the value of the thing which
forms the subject-matter of the agreement is not to be considered a
mistake as to a matter of fact. In simpler words, an incorrect statement
made by either one of the party may cause the contract to be void.

COMMON MISTAKE

Common mistake occurs where

both parties are mistaken on
the same matter about the
facts to the contract.

FIRST CATEGORY : RES EXTINCTA

COUTURIER V HASTIE (1856) 5 HLC 673
Facts : A cargo of corn was in transit being shipped from the Mediterranean to
England. The owner of the cargo sold the corn to a buyer in London.
The cargo had however, perished and been disposed of before the
contract was made. The seller sought to enforce payment for the goods
on the grounds that the purchaser had achieved title to the goods and
therefore bore the risk of the goods being damaged, lost or stolen.
Issue :
Whether the seller was liable to enforce payment for the goods.

Court Held :
The contract was void because the subject matter of the
contract did not exist at the time the contract was made.
Where both parties enter a contract with the belief that the
subject matter exists when in fact it does not exist, Res
extincta will be applied.

SECOND CATEGORY : RES SUA

COOPER V PHIBBS (1867) LR 2 HL 149
Facts :
A nephew leased a fishery from his uncle. His uncle died. When the lease
came up for renewal the nephew renewed the lease from his aunt. It later
revealed that the uncle had given the nephew a life tenancy in his will.
Issue :
Whether the nephew is liable to receive the lease.
Held :
The lease was held to be voidable rather than void as the claim was based
in equity as it related to beneficial ownership as oppose to legal ownership.

MUTUAL MISTAKES
A mutual mistake occurs when the
parties to a contract are both
mistaken about the same material
fact within their contract. They are at
cross-purposes. There is a meeting of the
minds, but the parties are mistaken.

RAFFLES V WICHELHAUS
(1864) 2 H & C 906 COURT
OF EXCHEQUER

Facts :
The parties entered a contract for the sale of some cotton to be shipped by
'The Peerless' from Bombay. The Peerless had a sailing from Bombay in
October and in December. The defendant thought that it was the October
sailing and the claimant believed it was the December sailing which had
been agreed.

Held :
The court applied an objective test and stated that a reasonable person
would not have been able to state with certainty which sailing had been
agreed. Therefore the contract was void as there was no consensus ad idem
(mutual assent).

UNILATERAL MISTAKE
Unilateral mistake is when only one party is
mistaken as to the subject matter contained in the
contract agreement
It can occur with regards to any of the terms and
provisions contained in a contract. (Example :
Definition of a phrase or word)

HARTOG V COLIN & SHIELDS

[1939] 3 ALL ER 566
Facts :
The defendants mistakenly offered a large quantity of hare skins
at a certain price per pound whereas they meant to offer them
at that price per piece. This meant that the price was roughly
one third of what it should be. The claimant accepted the offer.
Issue :
Whether the offer accepted by the claimant is valid by the
defendants mistake.

Held :
The court held that the contract was void for
mistake. Hare skins were generally sold per piece
and given the price the claimant must have
recognized the mistake.

CONCLUSION
An agreement entered into under a mistake is
void. Thus, no party is under obligation to
perform it. According to Section 66, if one of
the parties has received any advantage under
the agreement is bound to restore it from
whom he received it.