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Common mistake

Mark Pawlowski examines the recent Court of Appeal decision in Great Peace Shipping Ltd v Tsavliris Salvage International) Ltd

6 December 2002

We all know things are done differently at common law and in equity. As first year undergraduates we were taught that some mistakes (albeit only a limited category) involving a shared misapprehension of some underlying fact rendered the contract void at common law: Bell v Lever Bros Ltd [1932] AC 161 (HL). But the position was different in equity where a number of authorities recognised the principle that a contract affected by a common ‘fundamental’ mistake in equity, although not void, could be set aside on terms. The classic exposition of this equitable doctrine is in Lord Denning MR’s judgment in Solle v Butcher [1949] 2 All ER 1107, at 1120. However, the issue of mistake only became relevant if the contract itself did not readily identify who should bear the risk of the relevant mistake: William Sindall plc v Cambridgeshire CC [1994] 3 All ER 932 (CA). If the contract was silent as to the allocation of risk, a plea of common mistake should be considered first because if th...

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