Free Law Dissertations - A) This Situation Relates To The Issue Of Unilateral Mistake As To The Cost
A) This situation relates to the issue of unilateral mistake as to the cost and also whether Adam would be able to discharge the contract prior to the commencement date by terminating the contract.
In relation to mistake, for mistake to be effective in making a contract void, it must be an operative mistake. In Bell v. Lever Brothers Ltd Lord Atkin held that ‘a mistake will not affect assent unless it is a mistake of both parties and to the existence of some quality which makes the thing without the quality essentially different from the things it was believed to be’.
There are some cases that refer to the mistake in price. In Hartog v. Colin and Shields it was held that where the plaintiff could not reasonably have supposed that the offer was the real intention of the persons making it, and must have known that it was made by mistake, the plaintiff did not, by his acceptance of the offer, make a binding contract with the defendant. This means that in the current case, if Belinda knows that the price offered by Adam was a mistake and Belinda knows that the price was underestimated, it could be argued that the Belinda would not be able to make a valid acceptance under that situation and thus there is no binding contract between the parties.
The fact however does not reveal this point. The fact states that the price was underestimated by Adam and since then the price of labour and material has increased. This may mean that Belinda does not know about this mistake. Based on the above it is argued that the mistake in the pricing was not a mutual mistake known to both parties. This does not meet the requirement set out in Bell v. Lever Brothers Limited above. Thus it can be argued that Adam would not be able to treat the contract as void by way of mistake.
Belinda’s position may be helped by the decision of the Court of Appeal in George Wimpey UK Ltd v. VI Construction Ltd. In this case the Court of Appeal held that prima facie a person entered into a contract intended to be bound by it. In this case the Plaintiff relied upon the doctrine of unilateral mistake to the fact that the cost of performing the contract was much higher than originally calculated and alleged that the defendant acted unconscionably in taking advantage of the situation. The Court based its decision on the case of Agip SpA v. Navigazione Alta Italia SpA where it was held that the authorities did not permit in any circumstances the rectification of the contract on the grounds of unilateral mistake unless the defendant had actual knowledge of the existence of the relevant mistaken belief at the time when the mistake plaintiff signed the contract.
On the other hand, Adam may request for the contract to be terminated before the commencement period. A contract may be discharged by agreement between both parties. This is called a discharge by agreement. For example, in a case relating to contract of employment, Igbo v.
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