Reasons in which a contract will arise even though there is a unilateral mistake are given below:
In the following two cases, where the consent is given by a party under a mistake which is as fundamental as goes to the root of the agreement and has the effect of nullifying consent, no contract will arise even though there is a unilateral mistake only:
1. Mistake as to the identity of person contracted with:
ADVERTISEMENTS:
Where such identity is important The rule of law is that a contract apparently made between and C is a complete nullity, if the inference from the facts is that to the knowledge of C, it was the intention of A to contract only with B, for, there can be no real formation of an agreement by proposal and acceptance unless a proposal is accepted by the person to whom it is made.
Thus, whenever the identity of the person with whom one intends to contract is important element of the contract, a mistake with regard to the person contracted with destroys his consent and consequently annuls the contract. Identity of person contracted with is important either when there is a credit deal or when one party has a set-off against the other party.
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It is important to note that in case of mistake as to identity of person contracted with, even if the mistake is committed because of fraud or misrepresentation of another party, the contract is not merely voidable but is absolutely void.
ADVERTISEMENTS:
Illustrations:
(a) In Boulton vs Jones:
Boulton had taken over the business of one Brocklehurst, with whom the defendant, Jones, had been accustomed to deal, and against whom he had a set-off. Jones sent an order for goods to Brocklehurst, which Boulton supplied without informing him that the business has changed hands. Jones consumed the goods in the belief that they had been supplied by Brocklehurst.
When Boulton demanded the payment for the goods supplied, Jones refused to pay alleging that he had intended to contract with Brocklehurst personally, since he had a set-off which he wished to enforce against him. Boulton, therefore, sued Jones for the price.
ADVERTISEMENTS:
It was held that Jones was not liable to -pay for the goods. Pollock C.B. observed, “It is a rule of law that if a person intends to contract with, 4, B cannot give himself any right under it.”
(b) In Cundy vs Lindsay:
A fraudulent person named Blenkarn, taking advantage of the similarity of his name with that of a big company named Blenkiron & Co., in the same town, placed an order with Lindsey & Co., for supply of certain goods on credit and signed the order in such a way as to look like that of Blenkiron & Co.
Lindsay & Co., mistook his order for that of Blenkiron & Co., and despatched the goods. Blenkarn took delivery of the goods and sold them to Cundy & Co., a bona fide purchaser for value, and did not pay Lindsay & Co., for them.
On coming to know the true facts, Lindsay & Co., filed a suit on Cundy & Co., for recovery of goods. The Court of Appeal held that owing to mistake as to identity of contracting party caused by Blenkarn, the rogue, there was no consensus of mind which could lead to any agreement whatever between Blenkarn and Lindsay & Co., and hence the agreement was void ab-initio and Blenkarn got no title to the goods which he could pass to Cundy & Co. As Cundy & Co., obtained no title to the goods, it must return them or pay their price to Lindsay & Co.
Notice that in the above case if the contract between Blenkarn and Lindsay & Co., would have been merely voidable for fraud, Cundy & Co., would have been entitled to retain the goods as it had taken them in good faith for value, because in case of a voidable contract before it is repudiated, one can pass a good title to a bonafide purchaser for value.
Hence the speciality of a mistake as to the identity of person contracted with becomes clear that in such a case, even if the mistake is committed because of misrepresentation or fraud of another party, the contract is absolutely void to the prejudice of third parties who later deal in good faith with the fraudulent person.
Further, “mistake as to the identity” of a party is to be distinguished from “mistake as to the attribute” of the other party. Mistake as to attributes, for example, as to the solvency or social status of that person, cannot negative the consent. It can only vitiate consent.
It, therefore, makes the contract merely voidable for fraud. Thus where X enters into a contract with Y, falsely representing him to be a rich man, the contract is only voidable at the option of Y.
Again where the identity of the party contracted with is immaterial, mistake as to identity will not avoid a contract. Thus if Centers a shop, introduces himself as Y and purchases some goods for cash, the contract is valid.
2. Mistake as to the nature and character of a written document:
The second circumstance in which even a unilateral mistake may make a contract absolutely void is where the consent is given by a party under a mistake as to the nature and character of a written document.
The rule of law is that where the mind of the signer did not accompany the signature; i’. e., he did not intend to sign; in contemplation of law, he never did sign the contract to which his name is appended and the agreement is void ab-initio.
Illustrations:
(a) An old illiterate woman executed a deed under the impression that she was executing a power of attorney authorising her nephew to manage her estate, while in fact it was a deed of gift in favour of her nephew.
The evidence showed that the woman never intended to execute such a deed of gift nor was the deed read or explained to her. The document was held to be void, as her mind did not go with her signature (Bala Devi vs Santi Mazumdar).
(b) M, an old man with feeble sight, signed a bill of exchange for £ 3,000 thinking it was a guarantee. It was held that M was not liable (Foster vs Mackinnon). In this case Byles J. made a very interesting observation:
“It was as if he had written his name in a lady’s album or on an order for admission to the Temple Church, or in the fly-leaf of a book, and there had already been without his knowledge, a bill of exchange … on the other side of the paper.”
It should be borne in mind that in the aforesaid type of mistake, even if one party’s consent is induced by misrepresentation of another, the contract is not merely voidable but is entirely void and the third party would acquire no rights ( Ningawwa vs Byrappa).