Mistake in Common Law and Syariah law

Definition

Common Law

Common Law (English Law) is the legal practice in England and Wales and most of the

commonwealth countries applied it in their nation as a main source of law and order. The main

basis of English common law is that it is made by the judges that sitting in courts, applying their

common sense and knowledge of legal precedent (stare decisis) to the facts before them. A

decision of the highest appeal court in England and Wales, the Supreme Court of the United

Kingdom, is binding on every other court in the hierarchy, and they will follow its directions.

Syariah Law

(Arabic: شريعة šarīʿah) Syariah law is the law in Islam that base two main sources which is Al

Quran and As Sunnah from Prophet Muhammad. Fiqh jurisprudence interprets and extends the

application of Syariah to questions not directly addressed in the primary sources by including

secondary sources. These secondary sources usually include the consensus of the religious

scholars embodied in ijma, and analogy from the Quran and Sunnah through qiyas.

Mistake in Common Law

Introduction

Making mistake is a normal human trait since the beginning of life. Same happen to law that is

made by human itself. Mistake happen in contracts same as happen in life. Despite this, the law

has responded, at least to some extent, to a plea of mistake. In doing so it has found it extremely

difficult to distinguish between mistakes which should be the basis for relief and those which

should not. This is one of the chaos areas of the law of contract in terms of trying to find a proper

structure and appropriate rules. It is an area which has generated unlimited debate but which, in

practical terms, is not very often litigated. English Contract Law has long try to understand the

effect of a fundamental common mistake in contract formation. The are many previous

authorities that related to the mistakes in English Contract Law. For example Bell v. Lever

Brothers LTD [1932] that recognize a doctrine of ‘mistake in equality’ which is most common

mistake in contract law. There are essentially three types of mistakes in contract:

Common mistake

Mutual mistake

Unilateral mistakes

Common mistake

At common law, one of the aspects that is said to ruin or corrupt a contract is the mistake of the

parties and one example of this is common mistake. Common mistake occur where each member

in the parties to the contract share the same mistake. In general terms, this type of mistake can

happen in three circumstances. First a common mistake as to the existence of the subject matter

of the contract(Res extincta), for example where the subject matter has terminated prior to entry

into the contract; second a common mistake as to the ownership of the subject matter of the

contract(Res sua), for example where the member in the contract buy something but they did not

recognize who is the real owner of the subject that being traded; and thirdly a common mistake

as to the qualities or attributes of the subject matter of the contract. There is possibility that the

subject is not fulfill the requirement that stated in the contract(Mistake as to quality) , for

example where both parties thought they were contracting for a wedding dress designed by a

famous fashion designer when in fact this was not so or worst, it’s a fake. At common law a

common mistake falling within the first two categories will make the contract void. For the third

category of common mistake – mistake as to the subject matter of the contract - the common law

has held that these mistakes do not generally corrupt the contract, but the contract will still

remains valid and enforceable.

The previous case related to each of the mistake in the common mistake:

Res extinct

Scott v Coulson [1903] 2 Ch 439

At the time of entering a contract for life insurance both parties believed the person whose life

was to be insured was living. The real fact is he already dead. The contract was void for mistake

as it was a common mistake as to the existence of the subject matter.

Couturier v Hastie [1856] 5 HL Cas 673 

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 attained title to the goods and therefore bore the risk of the

goods being damaged, lost or stolen. The court held that the contract was void because the

subject matter of the contract did not exist at the time the contract was made.

Res sua

Cooper v Phibbs (1867) LR 2 HL 149

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 transpired that the uncle had given the

nephew a life tenancy in his will. The lease was held to be voidable for mistake as the nephew

was already had a beneficial ownership right in the fishery. This is an instance of  res sua.

Normally where a contract is found to have been entered under a common mistake the contract

will be rendered void as oppose to voidable. 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. This caused some uncertainty as to whether there was equitable relief for mistake

which was wider than that which existed at common law.

Mistake as to quality

Bell v Lever Bros [1932] AC 161

Lever bros appointed Mr Bell and Mr Snelling (the two defendants) as Chairman and Vice

Chairman to run a subsidiary company called Niger. Under the contract of employment the

appointments were to run 5 years. However, due to poor performance of the Niger company,

Lever bros decided to merge Niger with another subsidiary and make the defendants redundant.

Lever bros drew up a contract providing for substantial payments to each if they agreed to

terminate their employment. The defendants accepted the offer and received the payments.

However, it later transpired that the two defendants had committed serious breaches of duty

which would have entitled Lever bros to end their employment without notice and without

compensation. Lever bros brought an action based on mistake in that they entered the agreement

thinking they were under a legal obligation to pay compensation.

The House of Lords held that this was only a mistake as to quality and did not render the contract

essentially different from that which it was believed to be. The action therefore failed.

Mutual mistake

 A mutual mistake is one where the parties are at different purposes. The courts apply an

objective test to see if the contract can be saved. In example, would a reasonable person looking

at the correspondence between the parties have understood the contract to have a single

meaning? If yes the contract is valid on that meaning. If a reasonable person could not determine

the meaning then the contract will be void for mistake.

The previous case related to mutual mistake:

Raffles v Wichelhaus (1864) 2 H & C 906

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. 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

Unilateral mistake

Only one of the parties is mistaken in the unilateral. This kind of mistake is more often compare

than other types of mistake. Within unilateral mistakes, there are two categories: mistakes

relating to the terms of the contract and mistakes as to identity.

Mistakes relating to the terms of the contract

Unilateral mistakes can possibly happen related to any of the terms and provisions contained in a

contract.  Most unilateral mistakes involve the definition of a phrase or word. For example, in a

contract for the sale of screws, one party may incorrectly believe that the word “screw” refers to

Phillips-head screws, when in fact the term refers to standard-type screws.  If only one party

holds this mistaken belief, but the other is clear on the meaning of “screw”, then this could be

called a unilateral mistake. On the other hand, if both parties believed that the word “screw”

referred to nails, and then this is an example of a mutual mistake. Unilateral mistakes also

frequently involve prices, quantities, dates, and the description of goods or services.

Mistakes as to identity

Mistakes as to identity usually induced by fraud in that one of the parties is mentioned that them

self as someone who they are not. There is thus an overlap with misrepresentation. A claim based

in mistake is more favorable to one based in misrepresentation as the affect of a finding of

mistake is that the contract is void as oppose to voidable. This is important where a rogue has

acquired goods and sold them on to a third party. If the contract is void the rogue will never

receive title to goods and will not be able to pass title when selling the goods. However, if the

contract is voidable the contract exists and title passes. If the goods are sold before the innocent

party rescinds the contract, the purchaser acquires good title to the goods. In determining

whether a contract will be held void for mistake the courts draw a distinction between contracts

made inter absentes (at a distance) and contracts made inter praesentes (face to face

transactions). 

Inter absentes: Where the parties are not physically present when the contract is made, for

example where the contract is made through dealings through the post, telephone or over the

internet, the courts will only make a finding of mistake if the claimant can demonstrate an

identifiable person or business with whom they intended to deal with. A mistake as to their

attributes will not suffice.

Inter praesentes: Where the parties’ contract in a face to face transaction the law raises a

presumption that the parties intend to deal with the person in front of them.

The previous case related to unilateral mistake:

Mistake as to the terms of the contract

Hartog v Colin & Shields [1939] 3 All ER 566

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 have been. The claimant accepted the offer. 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 realized the mistake.

Mistake as to identity

Cundy v Lindsay (1878) 3 App Cas 459

A rogue, Blenkarn, hired a room at 37 Wood street, Cheapside. This was in the same street that a

highly reputable firm called Blenkiron & Son traded. The rogue ordered a quantity of

handkerchiefs from claimant disguising the signature to appear as Blenkiron. The goods were

dispatched to Blenkiron & co 37, Wood street but payment failed. Blenkarn sold a quantity the

handkerchiefs on to the defendant who purchased them in good faith and sold them on in the

course of their trade. The claimants brought an action based in the tort of conversion to recover

the value of the handkerchiefs. The success of the action depended upon the contract between the

Blenkarn and the claimant being void for mistake. If the contract was void, title in the goods

would not pass to the rogue so he would have no title to pass onto the defendants. Ownership of

the goods would remain with the claimant.Held: The contract was void for unilateral mistake as

the claimant was able to demonstrate an identifiable existing business with whom they intended

to contract with.