those parties and applicable regulatory enactment.)

3 Mistake must be of fact and not of law. This concept has a technical meaning and does not cover errors of judgment as to value. Thus if A buys an article thinking it is worth ￡100 when in fact it is worth ￡50 only, the contract is good. And A must bear loss if there has been no misrepresentation by the seller. This is what is meant by the maxim caveat emptor (let the buyer beware.)

4 An interesting example of how the judiciary can interpret what some might think to be mistakes of law as mistakes of fact in provided by Solle v. Butcher. In that case Butcher had agreed to lease a flat in Beckenham to Solle at a yearly rental of ￡250, the lease to run for seven years. Both parties had acted on the assumption that the flat, which had been substantially reconstructed, so as to be virtually a new flat, was no longer controlled by the Rent Restriction legislation then in force. If it were so controlled the maximum rent payable would be ￡140 per annum. Nevertheless Butcher would have been entitled to increase that rent by charging 8% of the cost of repairs and improvements which would bring the figure up to about ￡250 per annum, the rent actually charged, if he had served a statutory notice on Solle before the new lease was executed. No such notice was in fact served. Actually they both for a time mistakenly thought that the flat was decontrolled when this was not the case. Solle realized the mistake after some two years, and sought to recover the rent he had overpaid and to continue for the balance of the seven years as a statutory tenant at ￡140 per annum. Butcher counterclaimed for rescission of the lease in equity. 5 Held: the mistake was one of fact and not of law. The fact that the flat was not within the provisions of the Rent Acts, and this was a bilateral mistake as to quality which would not invalidate the contract at common law. However, on the counterclaim for rescission, it was held that the lease could be rescinded. In order not to dispossess Solle, the court offered him the following alternatives (a) to surrender the lease entirely；or (b) to remain on possession as a mere licensee until a new lease could be drawn up after Butcher had had time to serve the statutory notice which would allow him to add a sum for repairs to the ￡140 which would bring the lawful rent up to ￡250 per annum.

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6 In practice, such mistakes may come into three categories：mutual (or non-identical bilateral) mistake, common (or bilateral identical) mistake and unilateral mistake.

7 Mutual (or non-identical bilateral) mistake occurs where X offers to sell car A and Y agrees to buy, thinking X is B, in other words, when concluding a contract both parties do not intend the same meaning. In this case, neither should be bound. In Raffles v. Wichelhaus (1864) S agreed to sell cotton to B to arrive on the Peerless. There happened to be two ships named Peerless, one to sail in October, the other to sail in December. The seller tendered the cotton from the December Peerless. The buyer intended to buy cotton from the October Peerless. Therefore it was held that there existed no contract between the parties. At common law the contract made in such a mistake is not necessarily void because the court will try to find the sense of promise. This usually occurs where, although the parties are at cross-purposes, the contract actually identifies the agreement. On the other hand, equity also tries to find the sense of the promise as identified by the contract, thus following the law. However, equitable remedies are discretionary and even where the sense of the promise as identified by the contract can be ascertained equity will not necessarily grant specific performance if it would cause hardship to the defendant.

8 Common (or bilateral identical) mistake occurs where both parties are mistaken and each makes the same mistake. In practice only common mistake as to the existence of the subject matter of the contract or where the subject matter of the contract already belongs to the buyer will make the contract void at common law. S and B had concluded a purchase and sale contract as to a shipload of maize. They had thought that the maize was on the ship. But in fact, the captain had executed his power to sell out the maize because the maize had begun to rot away. In this case both parties were not bound because of non-existence of the maize. This can be also illustrated in Galloway v. Galloway (1914). A man and woman entered into a separation deed, believing that they were husband and wife. This was not so, because the prior spouse of the husband turned out to be still alive. The separation deed was held to be void, because the marriage, which was the basis of the deed, did not exist.

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9 Unilateral mistake. If one of the parties should not have known or did not know of the quality, the main part or the nature of the contract and the other party knew, there is a contract according to the former‘s misunderstanding. In this situation the former cannot repudiate the contract unless he can prove in evidence that he has been intentionally deceived and induced to enter into the contract he did not intend to. Consider the situation：If an offeror misdirects his offer to the person, the latter cannot accept the offer if he knows or has reason to know that he was not the intended offeree. However, if the offeree neither knows nor has reason to know of the misdirection of the offer the unintended offeree may accept and create an enforceable contract.

10 The validity of a contract is usually not affected by mistake unless the mistake is fundamental and harmful to the contract. In practice, the following mistakes result in a valid contract. (a) A mistake in intention made by one party, for example, a mistake made in calculation of price. (b) A mistake in judgment, for example, a mistake in estimate of one‘s ability to perform a contract. (c) A mistake in understanding the meaning of a description of certain products in sale of them. 11 In the light of civil law there are two kinds of mistakes shall vitiate a contract. (a) A mistake in the quality of a subject matter (this quality seen as a substantial one without which the buyer would not have bought). (b) A mistake in identity of the other counter-party which is vital to the conclusion of a contract.

12 It is held in the GBG that a contract shall be rescinded by (a) a mistake in manifestation of the intention and (b) a mistake in form of manifestation of the intention. (1373 words)

New Words and Proper Terms

caveat emptor Peerless

n. 买方自慎; 货物售出，概不退还 n. 无敌号货轮

举证

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in evidence

arbitration agency reality

仲裁机构

n. 真实性 n. 协商 n. 身份 n. 一年

v. 解除对……管制 v. 使……无效

consultation identity annum decontrol vitiate

dispossess v. 剥夺

Notes

1. Mistake must be of fact and not of law.

错误可以是事实错误（ mistake of facts）， 即与交易的实际情况不相符合的错误； 也可以是法律错误（mistake of law），即合同适用法律方面的错误。 单方错误与双方错误。

Mistake of Law: \does not know that the legislature has passed a law criminalizing something or that a person does know what is against the law, i.e., does not know what the law forbids, that this ignorance does not operate to relieve the person of criminal responsibility for the commission of the crime. At common law, mistake of law or \law\

Mistake of Fact: There, it is required that the defendant must have acted or omitted to have acted under an actual and reasonable belief in the existence of the facts. Those facts or circumstances, if true, must have made the defendant's conduct lawful. The defendant's belief must not only be actual (honest) but also a reasonable belief.

Exercises

I. Write T (true) or F (false) for each statement of the following according to what you have learnt from the text:

1. A contract must be an agreement reached through consultation.

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