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Oxford Law Citator

Part IV Validity, 17 Mistake and Error

From: Global Sales and Contract Law

Ingeborg Schwenzer, Pascal Hachem, Christopher Kee

Content type:: Book content

Product:: International Commercial Law [ICML]

Published in print:: 26 January 2012

ISBN:: 9780199572984

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Subject(s):: Performance of contract — Validity of contract — Formation of contract

17 Mistake and Error

A. General Remarks 17.01
B. Conceptual Underpinnings 17.04
1. I. Relationship to Common Law Misrepresentation 17.07
2. II. Categorization 17.11
  1. 1. Who v Type 17.11
  2. 2. Common Mistake 17.14
  3. 3. Mistakes as to Motive Usually Irrelevant 17.16
  4. 4. Mistake of Fact v Mistake of Law 17.18
  5. 5. Erreur-obstacle and Mutual Mistake Not Mistakes 17.22
C. Characteristics of Relevant Mistakes 17.23
1. I. Essential Nature and Causation 17.23
2. II. Impact of Co-Contractant’s Reliance 17.25
3. III. Must be Excusable 17.26
D. Mistake as to Identity 17.28
E. Error of Expression 17.29
1. I. Significance of Co-Contractant’s Awareness 17.31
2. II. Errors of Calculation 17.35
F. Mistake as to Subject Matter or Circumstances 17.37
1. I. Incorrectly Named Goods 17.37
2. II. Existence of Goods 17.38
3. III. Features of Goods 17.40
G. Relationship to Sale of Goods Remedies 17.43

(p. 213) A. General Remarks

17.01 The issue of mistake or error is one of the most difficult contract law topics in each and every jurisdiction.¹ No one jurisdiction appears to have resolved these difficulties despite the fact the issue is approached from a variety of perspectives.

17.02 One reason for the difficulty is the considerable overlap that exists between mistake and other doctrines. The role of good faith and duties of disclosure in civil law systems and questions of pre-contractual misrepresentation² in common law systems are often relevant to a situation which may at first appear to be one of mistake.

17.03 This chapter examines the various laws that permit a party to rely on a mistake, or perhaps more accurately the restrictions the law places on a party’s ability to rely upon mistake.³ This latter formulation is more accurate because as a matter of practice and logic, mistake as a legal issue only arises after contract interpretation has revealed an error in understanding. There must be a discrepancy between the way the contract has been legally interpreted and the way one party understood the contract. Furthermore the risk of that discrepancy must not have been allocated expressly or implicitly in the contract. Implicit in the notion of freedom of contract is the principle that a party should not be bound to a bargain which was never supported by its will. However, in respect of contracts generally, but particularly in the sale of goods, this must be balanced against the commercial certainty required for trade—there is a general need that parties have confidence that they can rely on the bargains they strike.

(p. 214) B. Conceptual Underpinnings

17.04 The broad question for the law is which party should be protected from any adverse consequences of a mistake. When considering that question there is divergence in approach amongst jurisdictions. It is a conceptual difference based on two closely connected aspects.⁴

17.05 First, the civil law, likely influenced by its preference for a subjective theory of contract, generally places greater protection on the true will of a party. In contrast, the common law, likely influenced by its preference for an objective theory of contract, puts a greater emphasis on protecting the reliance of the other party.

17.06 Secondly, and consequentially, as a very general statement it can be said that civil law and Shari’a jurisdictions focus on the mistake itself, whereas common law systems concentrate on the cause of the mistake.⁵ The difference in conception underlies both the different structure of the law of mistake in the different legal systems and the varying importance given to it. Mistake has at all times been an important concept within civil law jurisdictions, whereas its relative importance within the common law has varied considerably over time and location. The common law focus on the cause of the mistake has, it would seem, led to greater emphasis and development on the issue of misrepresentation. As a consequence many scenarios which would be dealt with as an issue of mistake under the civil law will be considered to belong to the ambit of misrepresentation in the common law.⁶

I. Relationship to Common Law Misrepresentation

17.07 Common law misrepresentation has been described as ‘a strange almalgam of law and equity and of contract and tort’.⁷ For the purposes of comparative analysis it does not sit completely comfortably in any one category.⁸ Common law contract textbooks typically deal with mistake and misrepresentation as separate topics; a distinction which can also be found in the sale of goods Acts.⁹ However from a functional perspective misrepresentation can be described as an induced mistake.¹⁰

17.08 Common law jurisdictions recognize three types of misrepresentation—innocent, negligent, and fraudulent.¹¹ The difference between the three lies in the manner in which the representation (which induced the mistake) was made. In the context of the present chapter the focus is on innocent, and to a lesser extent negligent, misrepresentation. Fraudulent misrepresentation is considered elsewhere.¹² An innocent misrepresentation is an honest but false representation of a past or present fact, which induces the mistaken party to enter into a contract with the party making the representation.¹³ Negligent misrepresentation occurs where the co-contractant (p. 215) makes a false representation without concern as to its truth knowing that the mistaken party may rely on that representation.¹⁴

17.09 Although the following discussion regarding mistake applies generally to misrepresentation, there is an additonal element required for a misrepresentation claim—namely a representation itself. To be actionable, a representation must be one of fact, false at the time it was made, attributable to the co-contractant, directed at the mistaken party, and reasonably relied upon by the mistaken party.¹⁵ Statements of opinion or intention are not actionable representations but could simultaneously be representations that there are factually good grounds for that opinion.¹⁶ Sales puff will not generally amount to actionable representations as to rely on them would be unreasonable.¹⁷

17.10 Some common law jursidictions have enacted pieces of legislation that partially deal with this area of the law.¹⁸ While principally relevant to the question of consequences and remedies,¹⁹ these acts in some cases also effectively reverse the burden of proof.²⁰

II. Categorization

1. Who v Type

17.11 As a result of the different methods of approaching the issue of mistake, there are significant differences in the terminology used—both between and within legal families. It can be seen that the common law prefers to label mistakes by who is mistaken whereas the civil law labels by the type of mistake.

17.12 In the common law mistakes are described as either: (i) common mistake, (ii) mutual mistake, or (iii) unilateral mistake.²¹ A common mistake is one that the parties share—an often-used example is where both parties believe a painting to be by an old master.²² Common mistake is the only grounds of mistake recognized in the common law (as opposed to equity) and it has a very narrow application.²³ Mutual mistake describes the situation where both parties are also mistaken but as to different facts. As explained below this is more appropriately addressed as a matter of contract formation rather than mistake.²⁴ Unilateral mistake is self-explanatory, and is the most important from a functional perspective.

(p. 216) 17.13 In the civil law the tendency is to describe mistakes in a more functional manner by identifying the type of mistake made. This provides a better basis for comparative analysis and accordingly ‘mistake as to identity’, ‘errors of expression’,²⁵ and ‘mistake as to subject matter or circumstances’ are all discussed in detail below.

2. Common Mistake

17.14 Commentators suggest that it is generally easier to find relief for a mistake when it is shared by the parties, that is, it is a common mistake.²⁶ Some jurisdictions limit relevant mistake to situations of common mistake,²⁷ while some, including the uniform projects, specifically refer to it.²⁸ Other jurisdictions appear to deal with it separately from the traditional mistake provisions, on the basis that neither party’s reliance on the contract is worth protecting.²⁹

17.15 As an additional observation, although relevant to all questions of mistake, the issue of contractual allocation of risk is particularly pertinent in cases of common mistake. Speculative contracts, which will likely frequently involve common mistakes, can be typically understood to have implicitly allocated risks.

3. Mistakes as to Motive Usually Irrelevant

17.16 Both civil law and common law jurisdictions also often discuss and distinguish a ‘mistake as to motive’. As a general proposition a mistake as to motive will not be regarded as a relevant mistake by most jurisdictions.³⁰ There are however exceptions. In the first instance where the mistake has been induced this may make a mistake as to motive a relevant one. In some systems that inducement may need to be fraudulent,³¹ whereas in common law systems it may also affect instances of innocent mispresentation. Furthermore a mistake as to motive may be relevant where it can be demonstrated that the motivation has been understood and/or agreed between the parties.³²

17.17 Mistakes as to the future are essentially mistakes of motive. The uniform projects include temporal references in the definition of mistake that specifically exclude mistakes as to the future³³—a position adopted by many³⁴ but not all domestic jurisdictions.³⁵

(p. 217) 4. Mistake of Fact v Mistake of Law

17.18 Traditionally, jurisdictions from both civil law and common law traditions have drawn a distinction between a mistake of fact and a mistake of law. Law in this context refers specifically to real law as opposed to private rights, the purpose of the distinction being that a mistake of law cannot amount to a relevant mistake. In this context though it may be noted that a mistake of law could lead to a relevant mistake of fact.

17.19 There are some Ibero-American civil codes which expressly maintain this distinction, although case law and commentary in some of these jurisdictions suggests mistakes of law are increasingly recognized.³⁶ Other civil law jurisdictions which do not mention the distinction appear to deal with the question under other headings of mistake, treating it either as an irrelevant mistake as to motivation or a relevant error be that as to the basis of the contract or error of expression.³⁷

17.20 The modern approach as reflected in the PICC,³⁸ the PECL³⁹ and the DCFR⁴⁰ is to provide equal treatment to both mistakes of law and mistakes of fact.⁴¹ At an international level this can be significant insofar as it may relate to import/export bans.

17.21 In the context of common law misrepresentation it is unclear whether a representation about the law can amount to an actionable representation. The traditional rule was that respresentations about the law were not actionable.⁴² However, it is now widely accepted that this rule is very much subject to the circumstances in which the representation was made. A representation about the law should be treated as if it were any other statement of opinion. It was noted above that statements of opinion may in some situations imply actionable representations of fact.⁴³

5. Erreur-obstacle and Mutual Mistake Not Mistakes

17.22 Although sometimes described as errors or mistakes,⁴⁴ erreur-obstacle and mutual mistake should not be considered as mistakes as such. These involve instances where as a result of a misunderstanding or incorrect belief the parties do not in fact form a contract. As such, they are more properly considered matters of contract formation and interpretation.⁴⁵

(p. 218) C. Characteristics of Relevant Mistakes

I. Essential Nature and Causation

17.23 Despite these differences in categorization all jurisdictions require that the mistake be subjectively relevant to the party suffering from the mistaken belief. Although there are some subtle differences in the terminology and construction used, at the nub of all jurisdictions is that the mistake must be ‘essential’.⁴⁶ Causality is intimately linked to this notion of essentiality as reflected wording adopted by the uniform projects.⁴⁷ In the context of common law misrepresentation, ‘materiality’ and inducement—that is causality—are also sometimes linked.⁴⁸

17.24 At first glance, approaches to determine whether a mistake was essential can be ostensibly grouped into two: (i) those that adopt an objective approach, in some instances by specifically defining the circumstances when a mistake will be essential and thus relevant⁴⁹ and (ii) those jurisdictions which apply a subjective test to the ‘essentiality’ of the mistake.⁵⁰ However, the distinction can be somewhat misleading as those jurisdictions adopting the subjective test often also require that the co-contractant knew or could have known the importance to the mistaken party thereby introducing something of an objective requirement.⁵¹

II. Impact of Co-Contractant’s Reliance

17.25 In a very small number of instances express reference is made to when the co-contractant (as distinct from the mistaken party) relies on the contract. Such a reference is made in the PICC.⁵² Relief for a mistake may be available if, as an alternative to any requirements of knowledge on the co-contractant’s part, the co-contractrant has simply not yet reasonably acted in reliance on (p. 219) the contract. Commentators have observed that circumstances where there has not been reliance seem to be quite rare.⁵³

III. Must be Excusable

17.26 When determining whether a mistake will be considered relevant, and thus whether relief will be provided, most jurisdictions give consideration to the role the mistaken party has had in the mistake. There are four alternative positions which appear to be adopted. First, in the majority of jurisdictions as a general proposition, where the mistaken party has contributed to the circumstances giving rise to its error, the relief for the mistake will be denied. The standard of contribution however varies amongst the different legal systems and ranges from gross negligence⁵⁴ through to ordinary negligence.⁵⁵ Secondly, other legal systems, while not incorporating inexcusability as a condition of relevance, do identify the mistaken party’s conduct as a matter to which consideration should be given.⁵⁶ The third group does not examine the conduct of the mistaken party as such but balances this against an obligation to compensate the co-contractant.⁵⁷ The fourth, very small, group considers the conduct of the mistaken party irrelevant.⁵⁸

17.27 There is arguably a fifth group when common law misrepresentation is included under the rubric of mistake.⁵⁹ In this instance, however, the excusable nature of the mistake arises because of the conduct of the co-contractant. It was noted above⁶⁰ that the mistaken party must have been induced into the contract in order to establish a misrepresentation claim. In this sense the mistaken party is blameless and therefore worthy of being excused.

D. Mistake as to Identity

17.28 A mistake as to the identity of the co-contractant, including their personal attributes, can be a relevant mistake where that person or their attributes are considered essential and without which the mistaken party would not have entered into the contract.⁶¹ Although some jurisdictions (p. 220) address identity under a separate heading from that of attributes (that is identity is a defined mistake itself whereas attributes goes to the substance) the practical results are almost always the same.⁶² The threshold question of whether or not a contract was in fact formed may again play a part—for example, where an offer specifically addressed to Party A is in fact accepted by Party B.⁶³

E. Error of Expression

17.29 An error of expression may be a misspelling, a slip of the tongue, clerical error, or a translation error where parties are contracting in a foreign language. It is the circumstance where an objective statement made by one party is not supported by that party’s real intent. Insofar as this type of error concerns translation errors, a distinction must be made from those situations where both parties make the same foreign-language mistake. Such a circumstance would be a common mistake, which is discussed below, and dependent on contract interpretation.⁶⁴

17.30 A straightforward and relatively common example of this kind of mistake involves price. There are a number of errors that might be made in this context. For example, wrong figures were entered into a form, the wrong currency symbol displayed, the wrong price displayed on a website. The particular circumstances in which an error of expression is made will determine whether the mistaken party is protected. In this regard the awareness and/or constructive awareness the co-contractant has of the mistake is relevant.⁶⁵

I. Significance of Co-Contractant’s Awareness

17.31 If the co-contractant is actually unaware of the mistake, the mistaken party may find relief under those systems which follow the French approach, however not strictly on the basis of mistake—a contract would not have been formed.⁶⁶ English law appears not to permit a remedy for mistake;⁶⁷ however other common law jurisdictions which still recognize an equitable doctrine of mistake may do so.⁶⁸ A number of jurisdictions permit rescission on the basis that the mistaken party owes compensation to the co-contractant.⁶⁹ The PICC, PECL, and DCFR all treat errors of expression and transmission as mistake issues.⁷⁰ The respective provisions of these instruments are almost identical, however commentary has taken quite different views on the manner in which they operate. It has been suggested that a purpose of Article 3.2.3 PICC is to protect a mistaken party from the standard objective interpretation rules which would likely bind it to a contract it did not intend.⁷¹ In contrast commentary on the DCFR indicates (p. 221) the objective interpretation rules would apply and no relief would be provided to the mistaken party.⁷²

17.32 Similar differences amongst the jurisdictions also emerge where the co-contractant was aware, or had constructive awareness, that there was a mistake but does not know the true intention of the mistaken party. As noted above in those jurisdictions following the French legal tradition the mistaken party will likely obtain relief insofar as there would be no contract.⁷³ This is also probably true of English and Dutch law.⁷⁴ Those jurisdictions adopting a similar approach to Germany would again allow rescission for the mistake, however if the co-contractant knew of the error then no compensation would be required from the mistaken party.⁷⁵ Common law jurisdictions other than England will in many instances, particularly those which are often described as ‘snapping up’ cases, grant relief to the mistaken party.⁷⁶

17.33 If the co-contractant was aware of the mistake and aware of what was actually intended by the mistaken party, then it can be expected that all legal systems would recognize a contract on the intended terms.⁷⁷ Some jurisdictions provide for rectification of written documents in this circumstance.⁷⁸

17.34 Whether the rules of interpretation within the CISG leave room for such error in expression is of some dispute but should be answered in the negative. Questions of mistake are primarily questions of the allocation of risks. The correct view under the CISG is that Article 8 of the Convention allocates the risk of error in expression which are therefore not matters of validity to be resolved by the applicable domestic law.⁷⁹

II. Errors of Calculation

17.35 When addressing errors of calculation it is important to distinguish between two factual scenarios. The first scenario involves what may be termed a hidden error of calculation, and as such is not a genuine error of expression. This is the situation where a party incorrectly calculates privately to itself and then without being cognizant of its own mistake communicates only the incorrect figure to the co-contractant. The mistaken party is expressing exactly the figure intended—it just happens to be wrong.⁸⁰ This situation is more accurately considered a mistake as to motive and may therefore not be recognized as essential.⁸¹

(p. 222) 17.36 However, in the second scenario where the calculation itself forms part of the communication, then there is what can be called an ‘open’ error of calculation. In such an instance some legal systems will recognize this as an essential mistake.⁸² In other legal systems this may be addressed as a situation where the co-contractant was aware of the mistake and aware of what was actually intended by the mistaken party.⁸³ The mistaken party may also have rights and remedies in the context of pre-contractual duties.⁸⁴

F. Mistake as to Subject Matter or Circumstances

I. Incorrectly Named Goods

17.37 Where the parties act under a common mistake of expression, this will be typically dealt with as a matter of contract interpretation by all jurisdictions.⁸⁵ It is also the approach of the uniform projects.⁸⁶ This situation is aptly demonstrated by the often cited ‘Haakjöringsköd ’ case.⁸⁷ This was a case where the parties contracted for haakjöringsköd both mistakenly believing it to refer to whale meat. Haakjöringsköd is in fact the Norwegian word for shark meat. When shark meat was delivered the buyer sued for non-conformity, and the seller attempted to rely on a common mistake. The court found in favour of the buyer determining that the parties had contracted for whale meat notwithstanding the incorrect use of the word.

II. Existence of Goods

17.38 In many legal systems an incorrect belief as to the existence of goods, whether they never existed or unbeknownst to the parties have ceased to exist, will render the contract a nullity. However the reason for this outcome varies from jurisdiction to jurisdiction, and may depend on whether the goods ever existed. In some instances it will be because of doctrines other than mistake, such as the rule found in those systems following Romanic tradition which require l’objet.⁸⁸ This would result whether or not the goods ever existed. Some jurisdictions would deal with this issue as one of initial impossibility.⁸⁹ Common law jurisdictions which modelled their legislation on the 1893 English Sale of Goods Act have a provision stating that where specific goods have perished when the contract was made then the contract is void.⁹⁰ However, there is some common law case authority to suggest that in circumstances where the goods never existed at all the seller would be liable for non-performance—the seller presumably being in a position to know whether or not the goods ever existed and therefore assumed the contractual risk.⁹¹ A similar result would be achieved under German law.⁹²

(p. 223) 17.39 The uniform projects all expressly state that initial impossibility is not in and of itself a cause of invalidity.⁹³ In the Official Commentary to PICC Article 3.5, it is noted that, in circumstances where the object has already been destroyed, Article 3.3 (the rule on initial impossibility) must be taken into account.⁹⁴ Subsequent commentary has suggested this should not be interpreted as indicating the rule on initial impossibility takes precedence over those concerning mistake, such that cases of initial impossibility could never be a matter of validity.⁹⁵

III. Features of Goods

17.40 It was noted above that, as a general proposition, mistakes as to motive are not considered relevant mistakes unless they are recognized by the seller and/or are reflected in the contract itself.⁹⁶ In this context it can be noted that a mistake as to mere value (that is, an incorrect belief as to market value) is a mistake as to motive and therefore typically not recognized as relevant mistake.⁹⁷

17.41 The archetypal examples of a mistake as to the features of a good are the painting incorrectly thought to be by an old master, or the vase incorrectly thought to be an original from the Ming dynasty. The scenario assumes that this is a common mistake, as in the event the seller knows of the true characteristics of the good, there is likely to be fraud or a breach of good-faith duties. However, even where the seller was similarly mistaken, the common law may treat this as a matter of innocent misrepresentation and not one of mistake—the seller will have inevitably represented its mistaken belief to the buyer, who has then acted on that misrepresentation.

17.42 Assuming the buyer’s mistake is not inexcusable because of expertise, most civil law jurisdictions would recognize this as a mistake,⁹⁸ unless more specific sale of goods duties would apply.⁹⁹

G. Relationship to Sale of Goods Remedies

17.43 As the above examples demonstrate, there is considerable potential for overlap between relief for mistake and remedies for breaches of obligations arising from sale of goods laws. This overlap is apparent in two very closely related ways. First the laws on the sale of goods may be understood to allocate risks to the parties. Where it has done so it is not necessary to have regard to mistake as such. However, secondly, it may be understood that relief from mistake and remedies from sales law are concurrent.¹⁰⁰ The position adopted on the first issue undoubtedly affects the extent of the second. The modern, and clearly preferable from an international perspective, view is that sale of goods law allocates risks.¹⁰¹

Footnotes:

¹ Kramer/Probst, § 11-4. Although perhaps not Nor, see Sefton-Green, p 372.

² See paras 24.02 et seq.

³ For the consequences of mistake see Ch 19.

⁴ Zweigert/Kötz, p 423; Beale et al, p 444.

⁵ Sefton-Green, p 380.

⁶ Common Law (Eng) Beale et al, p 444.

⁷ Burrows/Finn/Todd, p 302. See also Chitty on Contracts, para 6-001.

⁸ Burrows/Finn/Todd, p 302; see also Sefton-Green, p 27, noting that treating misrepresentation as a form of pre-contractual liability is relatively uncontroversial.

⁹ See for example Aus (Vic) s 4(2) SGA; Can (BC) s 73(1) SGA; Eng s 62(2) SGA; Hkg s 62(2) SGO; Irl s 61(2) SGA; Nzl s 60(2) SGA; Sco s 62(2) SGA; Sgp s 62(2) SGA; Wal s 62(2) SGA (all listing mistake and misrepresentation separately).

¹⁰ See Beale et al, p 444. See also Can Waddams para 415; Sco McBryde, p 94.

¹¹ See Common Law (UK) Chitty on Contracts, para 6-005 describing the relationship between innocent and negligent misrepresentation.

¹² See Ch 18.

¹³ Common Law (UK) Chitty on Contracts, paras 6-006 et seq; Aus The Laws of Australia/Vout, para 35.2.10; USA § 552C Restatment (2d) of Torts.

¹⁴ Common Law (Eng) Esso Petroleum Co Ltd v Mardon [1976] QB 108 (CA). See also Can Waddams paras 430 et seq.

¹⁵ Common Law (UK) Chitty on Contracts, paras 6-001 et seq; Aus The Laws of Australia/Vout, para 35.2.150, Gould v Vaggelas (1984) 157 CLR 215 (HC) (addressing fraudulent misrepresentation but equally appliable to innocent misrepresentation); USA Farnsworth, vol I, 1 §4.10.

¹⁶ Common Law (Eng) Edgington v Fitzmaurice (1885) 29 Ch D 459, Chitty on Contracts, para 6-006; Aus Middleton v Aon Risk Services Australia Pty Ltd [2008] WASCA 239, The Laws of Australia/Vout, paras 35.2.430 et seq; Can Waddams para 421.

¹⁷ Common Law (UK) Chitty on Contracts, para 6-037; Can Waddams para 422.

¹⁸ Aus (ACT) Civil Law (Wrongs) Act (2002); (SA) Misrepresentation Act (1972); Eng Misrepresentation Act (1967); Nzl Contractual Remedies Act (1979); Sgp Misrepresentation Act (1993); Wal Misrepresentation Act (1967); Zmb Misrepresentation Act (1968).

¹⁹ See para 19.04.

²⁰ See Eng s 2(1) Misrepresentation Act (1967); Nzl Contractual Remedies Act (1979); Sgp s 2(1) Misrepresentation Act (1993); Wal s 2(1) Misrepresentation Act (1967); Zmb s 3(1) Misrepresentation Act (1968).

²¹ See eg Can (BC) Seppanen v Seppanen 59 BCLR 26 (BC SC); USA Farnsworth, vol II, §§ 9.2, 9.3, 9.4.

²² An example referred to in Eng Bell v Lever Brothers [1932] AC 161. Common mistake is also known to the civil law (Kramer/Probst, § 11-47) and is discussed at para 17.14. In the common law this particular example may be dealt with as an innocent misrepresentation rather than mistake.

²³ Unfortunately however a leading judgment Bell v Lever Brothers [1932] AC 161 uses the expression ‘mutual mistake’; this ‘mistake’ itself was corrected by the more recent Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] QB 679.

²⁴ See para 17.22.

²⁵ Sometimes also referred to as an error of communication. Errors of expression also include errors of transmission.

²⁶ Kramer/Probst, § 11-46.

²⁷ In common law a mistake (as opposed to one recognized by equity) must be a common mistake, see Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] QB 679.

²⁸ Art 4:103(1)(a)(iii) PECL; Art II-7:201(1)(b)(iv) DCFR; Dza Art 81 CC; Egy Art 120 CC; Hun Art 210(3) CC; Irq Art 119 CC; Lbn Arts 203, 207 CO; Lby Art 120 CC; Nld Art 6:228(1) CC; Syr Art 121 CC; Yem Art 173 CC.

²⁹ See Vogenauer/Kleinheisterkamp/Huber, Art 3.5, para 10 citing references; Kramer/Probst, §11-47 referring specifically to Aut and Ita.

³⁰ Vogenauer/Kleinheisterkamp/Huber, Art 3.5 (2004), para 38; see generally Beale et al, p 482; Common Law Smith v Hughes (1871) LR 6 QB 596; Arm Art 312 CC; Aut Koziol et al/Bollenberger, § 871, paras 1, 7; Aze Art 347 CC; Blr Art 179 CC; Che Art 24(2) CO; Cri Brenes Cordoba/Ramírez/Trejos, p 67; Cub Art 73 CC; Cze Art 49aCC; Deu BGH, 5 June 2008, NJW (2008), 2442, 2443; Bamberger/Roth/Wendtland, § 119, para 37; Dza Filaly, Al Nazria Al Ama Li Aqd, pp 117–19; Esp Art 1266 CC; Geo Art 76 CC; Hnd Art 1557 CC; Hrv Art 281 CC; Hun Art 210 CC; Jpn Art 95 CC; Kaz Art 159 CC; Kgz Art 196 CC; Kwt Abdel Reda/Al Nakas, pp 84, 85; Ltv Art 1449 CC; Mda Art 230 CC; Mex Art 1813 CC; Rus Art 178 CC; Sau Rayner, pp 199–203; Sgp Halsbury’s Laws of Singapore/Low Kee Yang/Kow, para 80.159; Syr Sawar, p 93; Tha Art 157 CC; Tkm Art 100 CC; Ukr Art 229 CC; Uzb Art 122 CC.

³¹ See eg Aut Koziol et al/Bollenberger, § 871, para 7; Deu Bamberger/Roth/Wendtland, § 119, para 39, but see disputing this MünchKommBGB/Kramer, § 119, paras 107 et seq. For issues involving fraud generally, see Ch 18.

³² Deu Beale et al, p 482 (although applicable more generally). See also references in n 30.

³³ PICC Art 3.2.1; Vogenauer/Kleinheisterkamp/Huber, Art 3.5 (2004), para 38 (observing that in any event these are usually risks the mistaken party has to bear); Art 4:103(1) PECL; Art II-7:201(1) DCFR.

³⁴ See also eg Aut OGH, 23 April 2003, 9Ob247/02t, Koziol et al/Bollenberger, § 871, para 12; Nld Art 6:228(2); USA § 151 Restatement (2d) of Contracts.

³⁵ See Che Schwenzer paras 37.31 et seq, BGer BGE 109 II 105 (110 f); Deu MünchKommBGB/Kramer, § 119, para 118 (disputed). See also Waddams, paras 363 et seq suggesting a link between mistake as to future circumstances and frustration. In this context see also para 45.94 and specifically approach of Che.

³⁶ Arg Art 923 CC; Chl, Art 1452 CC; Col Art 1509 CC; Ecu Arts 13, 1495 CC; but contra see Valdivieso Bermeo, p 32; Hnd Art 6 CC; Ind Contract Act (1872) s 21; Nic Art 2462 CC; Pry Art 285 CC; Slv Art 1323 CC; Ven Art 1147 CC; but contra see Supreme Tribunal, Cass soc, 19 December 2001, Judgment 363, file 01-474.

³⁷ See Kramer/Probst, § 11-88, discussing Aut, Che, Deu, Esp, and Fra. See also Rom Dincă, para 169.

³⁸ Art 3.2.1 PICC.

³⁹ Art 4:103 PECL.

⁴⁰ Art II-7:201(1) DCFR.

⁴¹ See Common Law (UK) Benjamin’s Sale of Goods, para 10-009; Afg Art 566 CC; Are Art 196 CC; Aus David Securities Pts Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (HC); Bhr Art 86 CC; Bra Art 139 (III) CC; Can Air Canada v British Columbia (1989) 59 DLR 4th 161, Waddams, para 393, but contra British Columbia Law Institute, ‘Report on relief under legally defective contracts: The Uniform Illegal Contracts Act’, BCLI Report no 52 (2008), p 14; Dza Art 83 CC; Egy Art 122 CC; Eng Kleinwort Benson Ltd v Lincoln City Council [1998] 4 All ER 513; Hkg Secretary for Justice v Kwan Kin Sang [2008] HKCU 1207 appearing to accept Kleinwort Benson Ltd v Lincoln City Council [1998] 4 All ER 513; Irl Clark p 283; Isr s 14(d) (General Part) CL; Jor Art 154 CC; Kwt Art 148 CC; Lbn Art 206 CO; Lby Art 122 CC; Ltv Art 1441 CC; Mar Art 40 CO; Mrt Art 60 CO; Nld Art 6:228 CC; Schelhaas/van Rossum, p 198; Nzl s 2 Contractual Mistakes Act (1977); Qat Art 131 CC; Sgp Singapore Management Corporation Strata Title No 473 v De Beers Jewellery Pte Ltd [2002] 2 SLR 1, Halsbury’s Laws of Singapore/Low Kee Yang/Kow, para 80.147; Syr Art 123 CC; Tun Art 44 CO; USA § 151, Comment B Restatement (2d) of Contracts, Farnsworth, vol II, § 9.2.

⁴² Common Law (UK) Chitty on Contracts, para 6-013; Aus The Laws of Australia/Vout, para 35.2.490.

⁴³ See para 17.09.

⁴⁴ See eg Esp Art 1266 CC; Fra Arts 1110, 1101 CC; Grc Art 142 CC; Ind ITC Limited v Geroge Fernandes AIR 1989 SC 839; Ita Art 1429(1) CC; Prt Art 251 CC.

⁴⁵ See for the CISG, Schlechtriem/Schwenzer/Schmidt-Kessel, Art 8, para 6, noting that the interpretation article (Art 8) allocates the risks of these kinds of mistakes.

⁴⁶ For a comparative overview see Kramer/Probst, § 11-13; Common Law (Eng) Bell v Lever Brothers [1932] AC 161 for common law mistake: ‘Essentially different from what the parties intended’; for equity Huyton SA v Distribuidora Internacional de Productos Agricolas SA [2002] EWHC 2088: ‘of some real importance’; Are Art 195 CO; Arm Art 312 CC; Aus Carter/Penden/Tolhurst, paras 20–30: ‘fundamental mistake’; Aut Koziol et al/Bollenberger, § 871, para 18 (essential meaning causal); Aze Art 347 CC; Blr Art 179 CC; Bol Kaune Arteaga, p 93; Che Arts 23, 24 CO; Chn Arts 51, 54 PRC CL: ‘fundamental misunderstanding’, Zhang, p 186, who translates requirement as ‘material misunderstanding’; Dza Art 82 CC; Egy Art 121(a) CC; Geo Art 73 CC; Grc Art 141 CC; Hun Art 210(1) CC; Irl Clark, p 304; Irq Art 118(i) CC; Ita Art 1429 CC; Jpn Art 95 CC; Kaz Art 159 CC; Kgz Art 159 CC; Khm Art 346 CC; Kor Art 109 CC; Lby Art 121(a) CC; Ltu Art 1.90 CC; Nga Yakubu, Nigeria, para 142; Qat Art 24 CC; Rom Art 954 CC; Rus Art 178(1) CC; Sco Gloag/Henderson, para 6.26, McBryde pp 90ff; Sgp Halsbury’s Laws of Singapore/Low Kee Yang/Kow, para 80.144; Ukr Art 229 CC; USA § 152(1) Restatement (2d) of Contracts; Uzb Art 122 CC; Yem Art 174(1) CC; but arguably not Deu §119(1) CC, however the compensation requirements in § 122 CC may effectively balance this situation. See also for Deu BGH, 8 June 1988, NJW (1988), 2597, 2598 (specifically referring to an essential mistake); Bamberger/Roth/Wendtland, § 119, para 45.

⁴⁷ Art 3.2.2(1) PICC: ‘would not have concluded it at all’; Art 4:103(1)(b) PECL: ‘would not have entered the contract’; Art II-7:201(1)(a) DCFR: ‘would not have concluded the contract’.

⁴⁸ See Common Law (UK) Chitty on Contracts, paras 6-0036 et seq; Aus Macquarie Generation v Peabody Resources [2000] NSWCA 361; Can Waddams, para 421; USA Farnsworth, vol I, 1 §§ 4.12, 4.13.

⁴⁹ Arm Art 312 CC; Aze Art 347 CC; Blr Art 179 CC; Che Art 24(1) CO; Geo Art 73 CC; Kaz Art 159 CC; Kgz Art 196 CC; Ltu Art 1.90 CC; Rom Art 954 CC; Rus Art 178 CC; Ukr Art 229 CC; Uzb Art 122 CC.

⁵⁰ Aut OGH, 2 September 1980, 5Ob573/80; Koziol et al/Bollenberger, § 871, para 18 (primarily actual intent of party, subsidiarily hypothetical intent of party, subsubsidiarily intent of a reasonable party); Cri Brenes Cordoba/Ramírez/Trejos, p 67; Cub Art 73 CC; Deu Bamberger/Roth/Wendtland, § 119, para 45 (subjective, yet completely unreasonable views are not relevant); Esp Art 1266 CC; Hnd Art 1557 CC; Mex Art 1813 CC, Collegiate Tribunal, Registry 249211, Séptima Época, SJF VI, p 139.

⁵¹ General Kramer/Probst, § 11-16; DCFR Art II:7:201(1)(a); PECL Art 4:103(1)(b); Aut § 871(1) CC; Bra Art 138 CC; Fra Ghestin, p 328; Ita Art 1431 CC; Nld Art 6:228(1)(a), (c) CC; Per Art 203 CC; Castillo Freyre/Horna, p 51; Prt Art 247 CC. In Deu knowledge or constructive knowledge impacts the availability of compensation to the co-contractant, see § 122(2) CC.

⁵² Art 3.2.2(1)(b) PICC; see also Aut § 871(1) CC; USA (possibly), see Kramer/Probst, § 11-51.

⁵³ PICC Vogenauer/Kleinheisterkamp/Huber, Art 3.5 (2004), paras 22 et seq.

⁵⁴ Art 3.2.2(2)(a) PICC; Jpn Art 95 CC.

⁵⁵ Art 4:103(2)(a) PECL; Art II-7:201(2)(a) DCFR (both the PECL and DCFR appear to equate inexcusable with negligence); Aus Carter/Penden/Tolhurst, paras 20–32 (carelessness); Bel Sefton-Green, p 21; Esp Sefton-Green, p 21; Fra Sefton-Green, p 21; Hun Art 210 CC; Ita Sefton-Green, p 21; but contra see Kramer/Probst, §§ 11–45; Art II-7:201, Note VIII, para 45 DCFR; Mda Art 227 CC; Phl Art 1331 CC; Pry Art 284 CC; Sgp Halsbury’s Laws of Singapore/Low Kee Yang/Kow, para 80.146; Svn Art 46(2) CO; USA Restatement (2d) Contracts, § 157 (culpable negligence); Ven Arts 1146, 1149 CC; Zaf Kramer/Probst, §§ 11–45 citing references.

⁵⁶ Scandinavia Art II-7:201, Note VIII, para 44 DCFR; Nzl s 7(2) Contractual Mistakes Act (1977).

⁵⁷ Arm Art 312 CC; Blr Art 179 CC; Brg Art 28(3) CO; Che Art 26 CO; Deu §§ 119, 122 CC; Grc Art 145 CC; Hrv Art 280 CC; Rus Art 278 CC.

⁵⁸ Ita Kramer/Probst, §§ 11–45; Art II-7:201, Note VIII, para 45 DCFR; but contra see Sefton-Green, p 21; Prt Art II-7:201, Note VIII, para 45 DCFR.

⁵⁹ See paras 17.07 et seq.

⁶⁰ See para 17.23.

⁶¹ PICC, Vogenauer/Kleinheisterkamp/P Huber, Art 3.5 (2004), para 45; Afg Art 565 CC; Are Art 195 CC; Arg Arts 924, 925, 926, 927 CC; Arm Art 312 CC; Aut § 873 CC; Aze Art 247 CC; Bel Art 1110 CC; Blr Art 179 CC; Bol Art 475 (2) CC; Bra Art 139 (I) (II) CC; Brg Art 28 CO; Can Waddams, paras 299 et seq; Chl Art 1455 CC; Col Art 1512 CC; Cri Brenes Cordoba/Ramírez/Trejos, p 68; Deu Staudinger/Singer, § 119, para 25; Dza Art 82 CC, Filaly, Al Nazria Al Ama Lil Aqd, pp 115–16; Ecu Art 1498 CC; Egy Art 121(2)(b) CC, Egyptian Civil Court of Cassation, 27 February 1981, Court of Cassation Rulings Collection, p 622; Basha, p 87; Esp Art 1266 CC; Fra Art 1110 CC; Geo Art 73 CC; Gtm Art 1259 CC, Aguilar Guerra, p 22; Irn Art 201 CC; Irq Art 118(2) CC, Amin, p 127; Ita Art 1429(3) CC; Kaz Art 159 CC; Kgz Art 196 CC; Kwt Abdel Reda/Al Nakas, p 84; Lbn Art 204 CO; Lby Art 121(2)(b) CC; Ltu Art 1.90 CC; Lux Art 1110 CC; Mar Art 42 CO, Safi, pp 316–18; Mrt Art 62 CO; Nic Art 2467 CC; Nld Art 6:228 CC; Pry Art 286 CC; Qat Art 24 CC; Rom Art 954 CC; Rus Art 178 CC; Sau Ashoush, p 116, Rayner, p 191; Sgp Halsbury’s Laws of Singapore/Low Kee Yang/Kow, para 80.165; Slv Art 1326 CC; Syr Art 122(a) CC, Sawar, pp 92–3; Tun Art 46 CO; Ukr Art 229 CC; Uzb Art 122 CC; Yem Art 174 CC.

⁶² But see Common Law (Sgp) Halsbury’s Laws of Singapore/Low Kee Yang/Kow para 80.165 suggesting a mistake as to attributes may be insufficient to rescind the contract. See also Benjamin’s Sale of Goods, para 3-015 criticizing any distinction. Similar USA Farnsworth, vol II, § 9.4.

⁶³ See para 10.07.

⁶⁴ See para 26.21.

⁶⁵ Fra see Civ 3, 4 July 2007, Recueil Dalloz 2007, p 2966 finding the notary’s mistake in the price (negotiated in Francs and converted into Euros) was not excusable. See also USA Farnsworth, vol I, 1 §4.11.

⁶⁶ See for instance Fra Cass Com, 15 February 1961, Bull Civ III.91 (finding the contract ‘inexistent’ for lack of consent on the price); similarly Nld Schelhaas/van Rossum, p 201.

⁶⁷ Eng Smith v Hughes (1871) LR 6 QB 596 (objective bystander test); Ind s 22 Contract Act (1872).

⁶⁸ See eg Aus Taylor v Johnson (1983) 151 CLR 422; Can 256593 BC Ltd v 456795 BC Ltd, 4 March 1999, 171 DLR (4th) 470; Irl Clark, p 283; see also Nzl ss 2(3), 6(1)(b) Contractual Mistakes Act (1977), although substantial disproportionate obligations are required: Burrows/Finn/Todd, pp 272, 283.

⁶⁹ See eg Aut Koziol et al/Bollenberger, § 871, para 5; Brg Art 28(3) CO; Che Art 24(1) no 1-3, 26(1) CO; Deu §§ 119(1), 122 CC; Grc Art 145 CC; Pry Art 284 CC (requiring negligence by mistaken party); Ven Art 1149 CC (requiring carelessness by mistaken party).

⁷⁰ Art 3.2.3 PICC; Art 4:104 PECL; Art II.-7:202 DCFR.

⁷¹ Vogenauer/Kleinheisterkamp/P Huber, Art 3.5 (2004), para 38.

⁷² Art II.-7:202, Comment A DCFR.

⁷³ See Beale et al, p 452; Fra Ghestin, p 317 (relief for mistake not granted where co-contractant could not have known what the essential qualities of the good were in the eyes of the mistaken party).

⁷⁴ Beale et al, p 457 (referring to Eng and Nld). See also Common Law (UK) Chitty on Contracts, paras 5-074 et seq citing Can and Sgp authorities.

⁷⁵ Deu §§ 119(1), 122 CC.

⁷⁶ Sgp Chwee Kin Keong and ors v Digilandmall.com Pty Ltd [2004] 2 SLR 594 (discussing Aus and Can as well). ‘Snapping up’ cases are situations where a seller has incorrectly noted the price of a good, usually significantly under its true price, and the buyer ‘snaps’ at the bargain; Can Waddams, para 399; Ind UP Government v Nanhoo Mai, AIR 1960 All 420; USA Farnsworth, vol II, § 9.4.

⁷⁷ Art II.-7:202, Comment C DCFR; General Beale et al, pp 455, 456 (by extrapolation of the discussion of Eng, Deu, and Fra); Common law (UK) Chitty on Contracts, paras 5-080 et seq; Sco Clive, Interpretation, p 54.

⁷⁸ See eg Common Law (Eng) Chartbrook Ltd v Persimmon Homes Ltd [2009] 4 All ER 677; Can Waddams, paras 337 et seq; Irl Clark, p 307; Nga Yakubu, Nigeria, para 142; Prt Art 249 CC; Sgp Halsbury’s Laws of Singapore/Low Kee Yang/Kow, para 80.156; USA § 155 Restatement (2d) of Contracts.

⁷⁹ See Schlechtriem/Schwenzer/Schlechtriem/Schmidt-Kessel, Art 8, para 6; concurring Schwenzer/Hachem, 57 Am J Comp L (2009), 472.

⁸⁰ See eg Can Imperial Glass Ltd v Consolidated Supplies Ltd (1960) 22 DLR (2d) 759 (BCCA), Waddams para 399 (noting case difficult and criticized); Eng Statoil ASA v Louis Dreyfus Energy Services LP (The ‘Harriette N’) [2008] EWHC 2257; USA Farnsworth, vol I, 1 § 4.11.

⁸¹ See paras 17.66 et seq.

⁸² See eg Aut OGH, 9 July 1997, 3Ob2043/96d in favour of rescission in case of an ‘open’ mistake in calculation (applying § 871 CC by way of analogy); Che Art 24(1) CO.

⁸³ See para 17.31. See also Deu BGH, 7 July 1997, NJW (1997), 3192.

⁸⁴ See Ch 24.

⁸⁵ This situation is encapsulated by the Latin phrase ‘falsa demonstratio non nocet’. See eg Aut § 914 CC; Che Art 18 CO; Deu § 133 CC; Fra Art 1156 CC; Ita Art 1362 CC.

⁸⁶ PICC Art 4.1, Comment; PECL Art 5:101; Art II.-7:202, Comment B DCFR.

⁸⁷ Deu RG, 8 June 1920, RGZ 99, 147.

⁸⁸ Beale et al, p 485; Sefton-Green, p 24.

⁸⁹ See paras 45.25, 47.07.

⁹⁰ Aus (Vic) s 11 SGA; Can (BC) s 10 SGA; Eng s 6 SGA; Gha s 6 SGA; Hkg s 8 SGO; Ind s 7 SGA (or damaged so as to no longer answer description); Irl s 6 SGA; Ken s 8 SGA; Mwi s 6 SGA; Mys s 7 SGA (or damaged so as to no longer answer description); Nga s 6 SGA; Nzl s 8 SGA; Sco s 6 SGA; Sgp s 6 SGA; Tza s 6 SGA; Wal s 6 SGA; Zmb s 6 SGA; Zwe s 6 SGA.

⁹¹ Aus McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 (HC); Carter/Peden/Tolhurst, para 20-17; Eng Couturier v Hastie (1856) 5 HL Cas 673 (arguably); Sgp Halsbury’s Laws of Singapore/Low Kee Yang/Kow, para 80.148.

⁹² Deu § 311a(2) CC.

⁹³ Art 3.1.3 PICC; Vogenauer/Kleinheisterkamp/P Huber, Art 3.3 (2004), para 3; Art 4:102 PECL; Antoniolli/Veneziano/Iamiceli, p 189; Schelhaas/van Rossum, p 193; Art II.-7:102 DCFR.

⁹⁴ Art 3.2.2, Comment 2 PICC.

⁹⁵ Vogenauer/Kleinheisterkamp/P Huber, Art 3.5 (2004), para 12.

⁹⁶ See para 17.16.

⁹⁷ While the actual price paid by a party is clearly reflected in the contract, that party’s mistaken belief as to a true value is not. See eg Art II.-7:201 Note VI (b) DCFR discussing DCFR and numerous jurisdictions. See also Beale et al, pp 476ff.

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