Self-test questions

. A 'common mistake', also called 'mutual mistake', is a mistake that prevents an agreement from being reached by the parties.

True

False

. Before considering the possible operation of the doctrine of common mistake, a court must first determine whether the contract has allocated the risk of the mistake to one or other of the parties.

True

False

. Which one of the following statements is inconsistent with the decision in Couturier v Hastie (1856) 5 HL 673?

This case concerned a contract for the sale of specific goods.

The decision might also be explained by the doctrine of frustration because the cargo was resold after it had been shipped.

The seller's claim for the contract price was rejected on the ground that the contract was void because of common mistake.

Had the buyer brought an action for damages, the seller might have been liable for breach of contract.

. It is generally true that, in a sale of goods contract, in the event of either non-existence or perishing of the subject matter, the contract will always be void.

True

False

. Which of the following statements concerning the decision of the House of Lords in Bell v Lever Brothers Ltd [1932] AC 161 are true? [Please select all that apply.]

The House laid down a more relaxed test of 'essential difference' than the test of impossibility.

The House laid down a test of 'essential difference' and construed it very narrowly.

The case related to a common mistake as to ownership (res sua).

The case related to a common mistake as to the quality of the subject matter.

. In which one of the following cases was the equitable jurisdiction to set aside a contract for 'fundamental' common mistake explicitly denied by the court for the first time?

William Sindall plc v Cambridgeshire CC [1994] 1 WLR 1016.

Grist v Bailey [1967] Ch 532.

Associated Japanese Bank (International) Ltd v Credit du Nord SA [1989] 1 WLR 255.

Great Peace Shipping Ltd v Tsavliris (International) Ltd [2002] EWCA Civ 1407, [2003] QB 679.

. Which of the following statements concerning the relationship between the doctrine of common mistake and the doctrine of frustration are true? [Please select all that apply.]

Whereas common mistake applies to initial impossibility, a frustrating event can only occur after the contract was entered into.

Common mistake renders a contract void, whilst frustration only renders it voidable.

Where payment has been made under the contract, common mistake enables the payor to recover the money; frustration does not.

The test applied to both common mistake and frustration is one of impossibility.

. A, a dealer in antiques, places a painting in his shop window priced at £10,000. A thinks that the painting may be by Arthur Frier, a local artist whose paintings are now being sought by professional collectors, but as he is not certain of the painter's identity, he decides not to place any label on the painting. B enters the shop and says: 'That looks like a Frier to me, I'll take it.' A does not reply. B pays the price of £10,000 in cash. B now discovers that the painting is not by Frier and seeks a full refund. Which one of the following statements most accurately summarizes the legal position?

A and B have made a common mistake regarding the subject matter of the contract. The contract is void and A must refund B.

The contract is probably valid on grounds of caveat emptor (buyer takes the risk). A neither contributed to B's mistake nor made any misrepresentation.

A is liable to refund B because A has probably taken the risk by remaining silent.

A is liable to refund B, if B rescinds the contract, because the contract is probably voidable according to the decision in Solle v Butcher [1950] 1 KB 671.

. A contract can be rendered void by common mistake only when it has not allocated the risk of the relevant mistake to one or other of the parties. In which one of the following cases was the contract rendered void by common mistake?

Nicholson & Venn v Smith-Marriott (1947) 177 LT 189.

William Sindall plc v Cambridgeshire CC [1994] 1 WLR 1016.

Amalgamated Investment & Property Co Ltd v John Walker & Sons Ltd [1977] 1 WLR 164.

Associated Japanese Bank (International) Ltd v Credit du Nord SA [1989] 1 WLR 255.

. A owns a tanker that has suffered a massive engine explosion. A finds out from an independent source that a ship owned by B is the closest vessel to the stricken tanker. B agrees to divert his vessel in order to render assistance to the crew of A's tanker, provided A will agree to a minimum hire charge of £50,000, 'irrespective of whether B's vessel is used or not'. A accepts B's offer but finds out within minutes that his tanker has already sunk with the loss of all hands. Which one of the following statements most accurately represents the legal position of A?

A is not bound to pay any hire charge because the contract is probably void for common mistake.

A is not bound to pay any hire charge because the contract is voidable for common mistake.

A is not bound to pay the hire charge because A's obligations under the contract are subject to an implied condition precedent that A's tanker was afloat at the time when A and B entered into the contract.

A is probably bound to pay the hire charge because the contract has allocated to A the risk of the tanker sinking.

. The English courts recognise the theoretical basis of the doctrine of common mistake, as in the case of the doctrine of frustration, as being based on an implied term that the contract will not be binding in certain circumstances.

True

False

. The equitable doctrine of common mistake, as established by Denning LJ in Solle v Butcher [1950] 1 KB 671, had solid foundation in precedent.

True

False

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