Mistake in law of contracts.

 

MISTAKE 

INTRODUCTION

This is also a continuation of previous lectures under the general topic on free consent.  It consists of fine technicalities and unsettled principles.  It therefore requires your undivided attention and patience.  During this lecture you will learn about mistake generally, the specific types of mistakes, the law governing mistakes and a lot of case examples on mistake. 

1. MEANING

Parties to a contract may sometimes enter into it under some misunderstanding or misapprehension.  If they had known the true facts, they would never have entered into the agreement.  The parties are said to labour under a mistake.

2. EFFECTS OF MISTAKE UPON A CONTRACT

Mistake may operate upon a contract in two ways:

(a) it may defeat consent altogether, or

(b) it may mislead the parties as to the purpose which they contemplate.

2.1 Where consent is Defeated

The cases where consent is defeated or rendered unreal fall under section 13 of the Ordinance.  This section defines consent as follows:

"Tow or more persons are said to consent when they agree upon the same thing in the same sense".

This is true consent or consensus ad idem, and it is at the root of every contract.  Lord Hannen in Smith vs Hughes (1871) LR 6 QB 597, 609 explained that:

"It is essential to the creation of a contract that both parties should agree to the same thing in the same sense.  Thus if two persons enter into an apparent contract concerning a particular person or ship, and it turns out that each of them, misled by a similarity of name, had a different person or ship in mind, no contract would exist between them"

2.2  Where Consent is Not Defeated

Cases where mistake does not defeat consent but only misleads the parties fall under section 20 of the Ordinance which provides:

"(1) 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.

(2) An erroneous opinion as to the value of the thing which forms the subject matter of the agreement is not to be deemed a mistake as to a matter of fact".

This section comes into operation only when:

(i) The mistake is a common mistake (i.e. mutual).  That is, when both the parties to an agreement are mistaken.  Section 22 amplifies this requirement by excluding unilateral mistakes.  It provides:

"A contract is not avoidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact".

(ii) The mistake is as to a matter of fact. Section 21 excludes mistakes on matters of law.  It provides:

"A contract is not avoidable because it was caused by a mistake as to any law in force in Tanganyika, but a mistake as to a law not in force in Tanganyika has the same effect as a mistake of fact".

For example, if A and B make a contract grounded on the erroneous belief that a particular debt is barred by the law of limitation.  The contract is not avoidable.

(iii) The fact about which they are mistaken is essential to the agreement.

3. WHAT FACTS ARE ESSENTIAL TO AN AGREEMENT?

Whether a fact is essential or not essential to an agreement depends on the nature of the promise made.  This is a question of fact which differs from case to case.  However, broadly there are certain facts which are essential to every agreement, namely:

(i) the identity of parties;

(ii) the identity and nature of the subject matter of the contract; and

(iii) the nature and content of the promise itself.

Now that you understand the basic principles of the law on mistake, let us look at the various kinds of mistake and the legal effects thereof.  

4. MISTAKE AS TO IDENTITY

4.1 When can it Occur?

Mistake as to identity occurs where one of the parties represents himself to be some person other than he really is.

For example, in the case of Jaggan Nath vs The Secretary of State of India (1886) 21 Punj. Rec. No. 21, 37 a person called  S, a brother of the plaintiff represented himself as the plaintiff and thus induced a government agent to contract with him.

Here, the government agent intended to contract only with S's brother and not S.  The latter knew this.  The agent was deceived by S's conduct.

The court's reasoning and holding was that, the offer by the government was meant for S.  His brother, posing as S accepted it.  This prevented real consent.

The rule is that, an offer which is meant for one person cannot be accepted by another.  In England this rule has been applied in a number of cases, particularly, those involving rogues.

The following case illustrations will assist you to understand better how mistake as to identity occur.

In the case of Boulton vs Jones (1857) 27 LJ Ex 117; 157 ER 232 the plaintiff had taken over the business of one Brocklehurst.  The defendant used to deal with Brocklehurst.  Not knowing of the change in ownership, they sent him an order for certain goods.  The order was received by the plaintiff who sent the goods.  The defendant came to know of the change only when he received an invoice and by that time he had already consumed the goods.  The defendant had a set off against Brocklehurst, and therefore, refused to pay the price.  The plaintiff sued him.

The defendant in the above case had specifically intended to deal with Brocklehurst against whom he had a set off claim.  When sending the order for the goods, he had Brocklehurst in mind and not the plaintiff.  Ignorance of the change in ownership of the business caused the defendant to be mistaken on the identity of the party he was actually dealing with.

Bramwell, B. Said that: 

"when anyone makes a contract in which the personality, so to speak, of the particular party contracted with is important, for any reason, whether because it is to write a book or point a picture or do any work of personal skill, or whether because there is a set-off due from that party, no one else is at liberty to step in and maintain that he is the party contracted with..."

In the case of Cundy vs Lindsay (1878) AC 459 the plaintiffs received orders in writing from a fraudulent man, called, Blenkarn.  The order papers had a printed heading: "Blenkarn & Co., 37 Wood street".  There was a well known and respectable firm, named, Blenkiron & Co., in the same street.  The plaintiffs, believing that the orders had come from this firm, sent a large quality of handkerchiefs.  Blenkarn received the goods and disposed them to the defendants, who acted in good faith.  The plaintiffs sued the defendants.

The question was whether there was a contract between the plaintiffs and the rogue, Blenkarn such as to entitle the latter to sell the goods.  From the facts of the case the plaintiffs intended to contract with Blenkiron & Co. and not Blenkarn & Co..  The close similarity in the name and address between the two, misled the plaintiffs into believing that they were dealing with Blenkiron & Co.  The name and address of Blenkarn & Co passed off as Blenkiron & Co.

Affirming the rule in Boulton vs Jones (supra) the House of Lords held that, since the plaintiffs intended to contract with Blenkiron & Co, no contract could have arisen between them and Blenkarn. 

"Of him they knew nothing, and of him they never thought.  With him they never intended to deal. Their minds never for an instant of time rested upon him, and as between him and them there was no consensus of mind which could lead to any agreement or any contract whatever.  As between him and them there was merely a one side to a contract, whereas, in order to produce a contract, two sides would be required".

4.2  Distinction Between Identity and Attributes

Identity of a person is different from his or her attributes.  Sometimes the mistake may not be one of identity of a person.  Rather, it is a mistake as to a person's attributes.

There can be a mistake as to a person's identity only when a person bearing a particular identity exists within the knowledge of the plaintiff, and the plaintiff intends to deal with him.  That means, if a swindler assumes a name of a fictious person, that is, a person who is not in real existence, then there can be no mistake of identity.

Let us look at the facts in the case of Kings Nortan Metal Co. vs Edridge, Merrett & Co. Court of Appeal (1897) 14 TLR 98 to illustrate the distinction.

A man named Wallis adopted the name "Hallam & Co.", a non-existent firm, and by letters placed order for some goods with the plaintiffs who complied with the order by sending the goods.  Wallis sold the goods to the defendants, who acted in good faith. The plaintiffs sued the defendants for the value of the goods.

In this case "Hallam & Co" was not in existence and therefore was not a separate entity.  The plaintiffs had never before heard of "Hallam & Co.".  The facts in this case, thus differed from the facts in Cundy vs Lindsay (supra) where "Blenkiron & Co" was a separate entity in existence and which was within the plaintiff's knowledge.

In order to establish whether there was a mistake of identity, the court had to resolve one fundamental question: with whom did the plaintiffs contract to sell the goods?  Did they have in mind "Hallam & Co", or did they intend to contract with whoever wrote the letter?

The court held that the plaintiffs clearly intended to contract with the writer of the letters.  Unlike in Cundy vs Lindsay where "Blenkiron & Co." was a separate entity, "Hallam & Co" was not a separate entity as it was not in existence.  If it could be shown that "Hallam & Co." was one entity which is distinct from Wallis, then the decision in Cundy vs Lindsay would have applied.

In this case therefore there was no mistake.  Rather, the contract was avoidable for fraud.  But, since the defendants had already acquired the property in good faith, the plaintiffs could not exercise the right of recession i.e. to avoid the contract.

4.3  Contracts Made Inter-Parties

Contracts which are made when the parties are in each other's presence cause more problems in deciding whether mistake as to identity was operative in obtaining consent.

The general rule is that, where parties contract in the presence of each other, they intend to deal with the person present before each of them respectively.

For example, in the case of Phillips vs Brooks Ltd [1919] 2 KB 243, a man called North, entered the plaintiff's shop and selected some pearls and some rings worth £ 3,000.  He produced a cheque book and wrote out a cheque for the amount.  In signing it he said: "You see who I am, I am sir George Bullough".  The plaintiff made reference to a directory to check whether sir George Bullough lived at the address mentioned.  On ascertaining the address the plaintiff let him have the ring.  He promised to come for the other articles after the cheque was cleared.  Before the fraud was discovered he pledged the ring worth the defendants who advanced money bona fide and without notice.  The plaintiff sued the defendants for the ring or its value.

The question before the court was, inter alia, whether there was an operative mistake as to identity.  To answer this question the court had first to determine the question: with whom did the plaintiff intend to contract?  It was held that the plaintiff intended to contract with the person present before him.  Horridge, J. adopted the expression of Morton C.J. in the case of Edmunds vs Merchant Despatch Co. (1883) 135 Mass 283 at p. 286 to elucidate the rule.  That is:

"The minds of the parties met and agreed upon all the terms of the sale, the thing sold, the price and time of payment, the person selling and the person buying.  The fact that the seller was induced to sell by the fraud of the buyer made the sale avoidable, but not void.  He could not have supposed that he was selling to any other person; his intention was to sell to the person present, and identified by sight and hearing, it does not defeat the sale because the buyer assumed a false name..."

However, the general rule that when a contract is made  when the parties are in the presence of each other they intend to contract with each other and who is physically present before each other is still wanting.  This is because sometimes one of the parties may intend to contract with a completely different person but is under a mistake as to the true identity of the person physically present at the time the contract is made.  Such was the situation in the case of Ingram vs Little (1961) 1 QB 31; (1960) 3 ALL ER 332.

In the Ingram Case, three ladies, the joint owners of a car, advertised it for sale.  A person called at their house and offered to pay an acceptable price.  But, when he pulled out a cheque book, the ladies told him that the deal was over as they would not accept cheque.  He then persuaded them to believe that he was one Hutchinson, a leading businessman, and quoted an address and a telephone number.  On verification of the particulars from a directory, the ladies gave him the car for a cheque.  He resold the car to the defendant and absconded.  The cheque proved worthless and the plaintiff sued the defendant for the car or its value.

The question before the court was: what was the intention of the ladies? That is, with whom did they intend to contract? with the man present in their drawing room or with the real Hutchinson?  To answer this question, the court asked itself: can it be said that the prima facie predominance of the physical presence of the false Hutchinson identified by sight and hearing was over-borne by the identity of the real Hutchinson on the facts of the case?

Two facts appear to have helped the court to dispose of the questions.  First, the ladies had refused to contract with the rogue immediately he pulled out a cheque book.  They specifically told the rogue that the deal was over.  Second, the ladies, upon hearing that the person before them was Hutchinson, a leading businessman and whose address and telephone number they verified from a directory, they were prepared to deal with him even by taking a cheque.  The second fact showed that the ladies had the real Hutchinson in mind, and it was to that real Hutchinson  they made the offer.  The false Hutchinson therefore could not accept an offer made to the real Hutchinson.  Accordingly the court held that a mistake of identity was operative.

The decision in Ingram vs Little has been criticised for posing problems of practical justice.  The question often raised is: why should an innocent buyer who acquires goods in good faith without suspecting any defect in the title of the seller be the victim?  That is, why should the title of the innocent buyer be made to depend on the state of a contract between third parties?

This question was addressed by the Court of Appeal in the case of Lewis vs Averay [1971] 3 ALL ER 907; [1972] 1QB 109; [1971] 3 WLR 603 CA.  

In that case, Lewis, the Plaintiff, had a car to sell.  A rogue came and identified himself as Richard Green, a famous film actor.  He tested and liked the car and offered a cheque.  The plaintiff told him to wait until the cheque was cleared, but when his resistance was broken, he demanded proof of identity.  The rogue produced a special pass of admission to a film studio which showed his photograph and the official stamp.  This convinced the plaintiff and he allowed the car to be taken away for the cheque.  The rogue lost no time in disposing off the car to an innocent buyer, the defendant.  The worthless cheque came back and the plaintiff sued the defendant to recover his car.

The Court of Appeal held that there was no mistake as to identity.  Rather, the contract was avoidable by reason of fraud.  Since the plaintiff had not avoided the contract before the car passed into the hands of the defendant, an innocent buyer, he acquired a good title.

The decisions in Phillips vs Brooks, Ingram vs Little and the case of Lewis vs Averay appear to be contradictory and irreconcilable.  In all cases the parties are present face to face.  The difference as suggested in Ingram vs Little is that in the case of Phillips vs Brooks the contract of sale was concluded before the rogue made the fraudulent misrepresentation, whereas in Ingram vs Little the rogue made the fraudulent representation before the contract was concluded.

But, inLewis vs Averay, Lord Denning considered such distinction as needless subtleties.  He emphasized that when parties are present face to face, the presumption is that the contract is made with the person actually present, even though there is a fraudulent impersonation by the buyer representing himself as a different man than he is.  Lord Denning argued that, in each case the property in the goods did not pass until the seller let the rogue have the goods.  That, these fine distinctions do no good to the law.

4.4 Where Identity of a Party is of Vital Importance

Where identity of the other party is of vital importance to the offer or, then the distinctions, for example, between a mistake as to identity and a mistake as to attributes is warranted.  A mistake as to identity in such a case will prevent an agreement from arising.

Whether identity is of vital importance depends upon the nature of the promise in each case.

For example, in Said vs Butt (1920) 3 KB 497, the plaintiff knew that on account of his adverse criticism of some members of a theater, he would not be allowed to be present at the first performance of a play at the theater.  A ticket was obtained for him by one of his friends without disclosing that it was for him.  But the defendant, the managing director of the theater, refused him admission on the night in question.  The plaintiff sued him for inducing breach of contract.

The question was whether there was a contract between him and the theater.  The court held in the negative.  It held that:

"The non-disclosure of the fact that the ticket was bought for the plaintiff prevented the sale of the ticket from constituting a contract, the identity of the plaintiff being in the circumstances a material element in the formation of the contract".

Another illustration is the case of Sowler vs Potter [1940] IKB 271.

The defendant was convicted for permitting disorderly conduct in a cafe.  She subsequently assumed a false name and obtained from the plaintiff a lease of premises in the same neighbourhood with a view to conducting a restaurant therein.  The plaintiff contended that if he had known her true identity he would never have granted the lease and the same was therefore void.

The court held that the consideration of the person with whom the plaintiff was entering into the lease was a vital element in that agreement so that the plaintiff having been mistaken with regard to the identity of the defendant, the lease was void ab initio (i.e. from the very beginning).

5. MISTAKE AS TO SUBJECT MATTER

Identity or quality of the subject matter of the contract is also a fact essential to every agreement.  Mistake as to subject-matter may take various forms as follows:

5.1 Non-existent subject-matter

This happens where the subject matter has ceased to exist before the contract is made.  Parties to a contract may agree on a sale of something which unknown to them has ceased to exist.

The example, in the case of Couturier vs Hastie (1856) SHLC 673: 10 ER 1065 the defendant was employed to sell the plaintiff's cargo which was on voyage.  After the defendant had sold the cargo to a third person, it was discovered that the cargo, having been damaged by bad weather, had been sold at an intermediate port.  The buyer repudiated the contract and the defendant, being a del credere agent (i.e. an agent who undertakes to be liable if the third person with whom he contracts on behalf of his principal fails to perform the contract) was sued for the price.

It is obvious from the facts that at the time of the purported sale the parties believed that the subject-matter of the contract was in existence.  That there was something to be sold and to be purchased.  This belief was erroneous because the goods were totally lost before the contract was made.  That is, they had been disposed off and could no longer be available for the sale transaction.

The court held that the defendant was not liable.  That, since at the time the contract was made there were no goods to be sold, the contract was void ab initio.  The same principle would apply, for instance, in a transaction to sell a bull which unknown to the parties was dead at the time of the bargain.

5.2 Mistake as to Title or Rights

Sometimes a buyer, unknown to the parties, is already the owner of that which the seller purports to sell to him.

For example, in the case of Cooper vs Phibbs (1867) LR 2HL 149 an uncle had told his nephew, without any intention to misrepresent anything, but because of an error of fact, that he (the uncle) was entitled to a fishery.  After the uncle's death, the nephew acting in the belief that the fishery belonged to the uncle, entered into an agreement to rent the fishery from the uncle's daughter.  Later it was discovered that the fishery in fact belonged to the nephew.

It was held by the house of Lords, that in such a case the mistake was such as not only to make the contract avoidable, but also liable to be set aside on such terms as the court thought fit to impose.

Note that, the setting aside of such a contract in a rule of equity.  The rationale is that a person cannot effectuate transfer to himself or herself.

The position is the same in a situation where though the buyer is not the owner, and the vendor also has no right to sell, the parties have mistakenly believed that he has the right to sell.  However, a mistake of this kind must be reasonable in the circumstances.

5.3 Different Subject - Matter in mind

This may occur where the parties due to a reasonable mistake of fact, have different subject-matter in mind.  In such a case the agreement will be void for want of true consent.

For example, in the case of Raffles vs Wichelhaus 159 ER 375 the defendant bought from the plaintiff a quantity of surat cotton "to arrive ex Peerless from Bombay".   Two ships with the name Peerless sailed from Bombay, one in October, which the defendant had in mind and the other in December which the plaintiff had in mind.

In this case the defendant meant one Peerless and the Plaintiff another.  The court held that, that being so there was no consensus ad idem and therefore there was no binding contract.

Note that, for the defendant, the Peerless which sailed in October was essential to the transaction because the goods would have arrived at the right time given the demand for surat cotton.  The December Peerless was to arrive at a time when there was a slump on the market for surat cotton.

5.4 Mistake as to the substance of the subject-matter

Mistake as to the substance of the subject-matter may relate to its substance, nature or quality.  Parties to a contract may be mistaken as to the existence of some fact or facts forming  an essential and integral element of the subject-matter.

For example, in the case of Sheikh Bros. Ltd. vs Ochener [1957] AC 136 (PC), the appellant company, the lessor of a forest in Kenya, granted a licence to the respondent to cut, process and manufacture all sisal growing in the forest.  The respondent, in return, undertook to manufacture and deliver to the appellant 50 tons of sisal fibre per month.  But it turned out that the leaf potential of the sisal area was not sufficient to permit the manufacture of the stipulated quantity and the respondent was sued for the breach.

Their lordships held that, having regard to the nature of the contract, which was a kind of joint adventure, it was the very basis of the contract that the sisal area should be capable of producing an average of 50 tons a month through the term of the licence.  The mistake as to the producing capacity of the sisal area was therefore held to be a mistake as to a matter of fact essential to the agreement.  The agreement was therefore held to be void.

It is important to remember that the fact about which the parties are mistaken must be essential to the agreement.  If the mistake is merely one as to a collateral fact which leaves the subject-matter substantially what it was supposed by the parties to be, does not negative the contract.

For example, A leases a mining estate which is known by reputation to measure 100 square meters to B.  It is discovered later that the area is much smaller in size.  The question then is, whether the exact area of 100 square meters more or less is essential for the colliery purpose for which the agreement is made.  In such a case the size is merely collateral.  The parties intended to transact on the area which is suitable for colliery the size notwithstanding.  The subject-matter, so far as it remains suitable for that purpose, the agreement remains what the parties intended it to be.

Whereas a mistake as to the substance of the subject-matter renders an agreement void, a mistake as to the quality of the subject-matter may not render the agreement void.

The case of Smith vs Hughes 1871 LR 6 QB 597 is very illustrative on the distinction between quality and substance.

In the case, the defendant wanted to buy old oats for his horses.  The plaintiff showed him the sample of the oats he had, but said nothing about their age.  The defendant kept the sample for twenty-four hours and then placed an order for the oats.  After a portion of them was delivered to him he found that they were new and, therefore, rejected them on the ground that he was mistaken about their quality.

The court held that the contract was not void. The House of Lords in Bell vs Lever Bros. [1932] AC 161 further explained the effect of mistake as to quality. Lord Atkin said (at p. 218):

"Mistake as to quality of the thing contracted for raises more difficult questions.  In such a case a mistake will not affect assent unless it is the mistake of both parties, and is ad to existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be".

The facts of that case were that lever Bros. appointed one Bell as a managing director for five years on an annual salary of £8,000 to manage one of their subsidiaries in Africa.  Much before the expiry of this term his services had to be dispensed with on account of the merger of the subsidiary with a third company.  Bell agreed to retire on a compensation of £30,000.  After this sum was paid, it was discovered that during his term of service, Bell had made secret profits and was therefore, guilty of breach of duty which entitled the company to dismiss him without compensation.  The company therefore, claimed the return of the money on the ground inter alia that it was paid under a mutual mistake of fact.

The court, by majority, held that the mutual mistake related not to the subject-matter, but to the quality of the service contract.

The plaintiff had contended that they agreed to pay compensation on the assumption that the service contract was one which could not be terminated without compensation, whereas the true fact was that the defendant could have been dismissed without compensation.

Referring to that specific contention, Lord Atkin said:

"I have come to conclusion that it would be wrong to decide that an agreement to terminate a definite specified contract is void if it turns out that the agreement had already been broken and could have been terminated otherwise.  The contract of release is the identical contract in both cases, and the party paying for release gets exactly what he bargains for.  It seems immaterial that he could have got the same result in another way, or that if he had known the true facts he would not have entered into the bargain".

6 MISTAKE AS TO THE NATURE OF PROMISE

6.1 When can it Occur?

Nature of the promise made is a matter of fact essential to an agreement.  A mistake as to nature of the promise may be common.  That is, both parties may be mistaken about the very nature of the promise.  For example, when a deed of one character is executed under the mistaken impression that it is of a different character.  If the mistake is common to both parties, then the agreement is void under section 20 of the law of Contract Ordinance.

But, a mistake as to the nature of the promise is often brought about by the fraud of one party.  It happens that one of the parties, being under a duty to disclose to the other the true nature of the document, fails to do so and thereby induces the other to sign the same under the belief that he is signing some other instrument of a different nature.  In such a case there is no real agreement, because the consent so induced is nullified by the mistake.  Section 13 of the Ordinance is hence not fulfilled and the agreement is rendered void ab initio.

Several, cases illustrate the operation of this kind of mistake.

In the Indian case of Raja Sigh vs Chaichoo Sing AIR 1940 Pat 201, the plaintiff appointed the defendant to look after his cultivation and his affairs, as he had become too old to manage them himself.  The defendant asked him to grant him a lease of his land.  The plaintiff agreed to it and placed his thumb-impression upon a deed which was in fact a gift of the land.

Note that, the plaintiff placed his thumb-impression on the instrument believing that the instrument was a lease when it was not.  The defendant had deliberately not disclosed the true nature of the instrument.  The court held that the deed was void ab initio.

Another case is the case of Pratap vs Puniya AIR 1977 MP 108.

In this case an illiterate lady who was the owner of farming land generally consulted her uterine brother on all important matters.  Once, finding that some strangers were occupying her lands, she approached her brother, who advised that an application should be made to the collector.  He took her to the collector's office and obtained her thumb-impressions upon some blank papers.  These were then registered as sale deeds in the name of some persons.  On discovering her mistake she challenged the transaction and obtained an order that the transaction was void and that she was still the owner of her lands.  The court said:

"There is a clear distinction between a fraudulent misrepresentation as to the character of a document and as to its contents.  Where the misrepresentation is as to the character of the document, the transaction is wholly void".

6.2 Distinction Between Mistake as to the Nature of the Promise and Failure to Express Intention

It is important to distinguish a mistake as to the nature of the promise and one which is merely based on failure to express correctly the intention of the parties.  That is, where an agreement as finally made fails to express or embody the agreement between the parties as originally made.  Whereas the former renders the contract void ab initio, the latter kind of mistake can be rectified to bring the agreement in accord with the intention of the parties.

For instance, in the case of Hatog v.s. Colin and Sheilds [1939] 3 ALL ER 566, the defendants contracted to sell to the plaintiff 3,000 Argentine hare skins, but by a mistake they offered the goods at so much per pound instead of so much per piece the price per piece was roughly one-third that of a pound.  The negotiations preceding the agreement took place on the basis of price per piece and that was also the usual practice of the trade.  The buyers sued for the goods.

Singleton, L.J. was satisfied:

"that it was a mistake on the part of the defendants which caused the offer to go forward in that way, and I am satisfied that anyone with any knowledge of the trade must have realised that there was a mistake...  The offer was wrongly expressed, and the defendants by their evidence and by the correspondence, have satisfied me that the plaintiff could not have reasonably supposed that the offer contained the offerer's intention".

Note that, the courts in such cases allow rectification to bring the agreement in accord with the intention of the parties as a relief.  The rationale is that, if relief of this kind was not allowed the result would be that one party would take an unconscientious advantage of the mistake of the other known to him.

However, in seeking such relief, the Court of Appeal in the case of Joseelyne vs Nissen [1970] 1 ALL ER 1213;; [1970] 2 QB 86; [1970] 2 WLR 509, CA observed that:

"It is not sufficient to show that the written instrument does not represent their common intention unless positively also one can show what their common intention was".

This means that, apart from establishing that there is common intention, there should also be convincing proof which shows an outward expression of accord.  That is, the outward expression should be capable of manifesting the existence of the common intention.  Otherwise, as Denning, L.J. cautioned in the case of Frederick E. Rose vs Wm. H. Pim Jurn & Co. Ltd. [1953] 1ALL ER 739 at pp. 747-48.

"There could be no certainty at all in business transactions if a party who had entered into a firm contract could after words turn round and claim to have it rectified on the ground that the parties intended something different.  He is allowed to prove if he can, that they agreed something different".

7. DOCUMENTS MISTAKENLY SIGNED OR `NON EST FACTUM'

In the foregoing lecture on mistake as to the nature of the promise you have learned the effect of signing an instrument which is of one character believing it to be of another character altogether.

In this part we shall examine the special defence of non est factum.  This is a defence which enables a person who has signed a contract to say that it is not his document because he signed it under some mistake.

Originally, this defence was evolved by the courts to relieve illiterate or blind people from the effect of a contract which they could not read and which was not properly explained to them.  However, the defence is now available to others through the judgement of Byles, J. in Foster vs  Mackinnon [1869] LR 4 CP 704 where he stated that:

"It seems plain, on principle and on authority, that, if a blind man, or a man who cannot read, or who for some reason (not implying negligence) forbears to read, has a written contract falsely read over to him, the reader misreading it to such degree that the written contract is of a nature altogether different from the contract pretended to be read from the paper which the blind or illiterate man afterwards signs; then, at least if there is no negligence the signature so obtained is of no force.  And it is invalid not merely on the ground of fraud, where fraud exists, but on the ground that the mind of the signer did not accompany the signature; in other words, that he never intended to sign and therefore in contemplation of law never did sign, the contract to which his name is appended".

The facts of the case were that a person was induced to sign the back of a paper, the face of which was not shown to him, and he was told that it was an ordinary guarantee the like of which he had signed before and under which no liability came to him, when, in fact, the paper was a bill of exchange and he was sued by a holder in due course as an endorser.

The court held that:

"the defendant never intended to sign that contract or any such contract.  He never intended to put his name to any instrument that then was or thereafter might become negotiable.  He was deceived not merely as to the legal effect, but as to the actual contents of the document.  It was as if he had written his name on a sheet of paper for the purpose of franking a letter, or in a lady's album, or on an order for admission to the Temple Church, or on the flyleaf of a book, and there had already been, without his knowledge, a bill of exchange or a promissory note payable to order inscribed on the other side of the paper".

This principle has been affirmed by the House of Lord in the case of Gallie vs Lee [1970] 3 ALL ER 961; [1971] AC 1004; [1970] 3 WLR 1078, albeit with some qualification.

The facts of the case were that, Mrs. G., a widow then aged seventy-eight years, wanted to help her trusted nephew and intended to transfer to him her house on the condition that he was to permit her to reside there for the rest of her life and she handed the title deeds to him.  The nephew came to her with one Lee who told her to sign a document saying that it was a deed of gift to the nephew and everything was in order.  She had broken her spectacles so that she could not read.  She put her signature which was witnessed by her nephew.  The document was an assignment in favour of Lee.  He mortgaged the house with building society and, having defaulted in payment, the society claimed possession.  She pleaded non est factum.

The House of Lords affirmed the decision of the Court of Appeal in Foster's case and held that the widow was bound by the contract.  In this case, in her own statements to the court, she said that she thought that her nephew and Lee would raise money on the house and she would do anything to help her nephew.  It is clear that she was not mistaken about the character of the document, only that it was put to a use which she did not expect.

The House of Lords, in particular, Lord Wilberforce emphasized that the law in this respect must retain flexibility because it has to reconcile two conflicting objectives: relief to a singer whose consent is genuinely lacking; and protection to innocent third party who have acted on apparently regularly and properly executed document.  Trying to work out the principles on which the plea of non est factum should be admissible, Lord Wilberfoce said:

"In my opinion, a document should be held to be void (as apposed to avoidable) only when the element of consent to it is totally lacking, i.e. more concretely, when the transaction, 

which the document purports to effect is essentially different in substance or in kind from the transaction intended.  Many of other expressions, or adjectives could be used - "basically' or "radically' or "fundamentally".

He added three qualifications to the principle.

(1) In the case of fraud, the principle of Foster vs Mackinnon (supra) will apply and the transaction will be void.

(2) If a man of ordinary education and competence chooses to sign a document without informing himself of its purport and effect, he cannot escape from the consequences, as regards innocent third parties, of signing the document.

(3) The case where the signer has been careless, in not taking ordinary precautions against being deceived.