CHAPTER VIII. MISTAKE. PART 1. OF MISTAKE IN GENERAL. consent. HITHERTO We have been dealing with perfectly general Conditions conditions for the formation or subsistence of a valid contract, affecting reality or which have always been acknowledged and treated as such, freedom of As a consequence of this the rules of law we have had occasion to explain are for the most part collateral or even paramount to the actual intention or belief of the parties. Exceptions to this do certainly occur, but chiefly where (as in great part of the doctrine of Impossibility) the rules are in truth reducible to rules of construction. We have had before us, on the whole, the purely objective conditions of contract; the questions which must be answered before the law can so much as think of giving effect to the consent of the parties. We now come to a set of conditions which by comparison with the foregoing ones may fairly be called subjective. The consent of the parties is now the central point of the inquiry, and our task is to examine how the legal validity of an agreement is affected when the consent or apparent consent is determined by certain influences. The existence of consent is ascertained in the first instance by the rules and considerations set forth in our opening chapter. When the requirements there stated are satisfied by a proposal duly accepted, there is prima facie a good agreement, and the mutual communications of the parties are taken as the expression of a valid consent. But we still require other conditions in order to make the consent binding on him who gives it, although their absence is in general not to be assumed, and the party seeking to enforce a contract is not expected to give affirmative Classification and legal consequences of Mistake, Fraud, &c. proof that they have been satisfied. Not only must there be consent but the consent must be true, full, and free. The reality and completeness of consent may be affected (a) by ignorance, that is by wrong belief or mere absence of information or belief as to some fact material to the agreement. Freedom of consent may be affected by fear or by the consenting party being, though not in bodily or immediate fear, yet so much under the other's power, or in dependence on him, as not to be in a position to exercise his own deliberate choice. Now the results are entirely different according as these states of mind are or are not due to the conduct of the other party (or, in certain cases, to a relation between the parties independent of the particular occasion). When they are so, the legal aspect of the case is altogether changed, and we look to that other party's conduct or position rather than to the state of mind induced by it. We speak not of Mistake induced by Fraud, but of Fraud simply, as a ground for avoiding contracts, though there can be no Fraud where there is no Mistake. We have then the following combinations: The legal consequences of these states of things are exceedingly various. (a) It is quite wrong, as Savigny has shown, to say that a consent determined by mistake, fraud, or coercion is no consent. Syst. §§ 114, 115 (3. 98 sqq.) If it were so the agreement would be absolutely void in all cases: a reductio ad absurdum which is no less complete for English than for Roman law. See per Lord Cranworth, Boyse v. Rossborough, 6 (b) It will be seen hereafter that omissions are equivalent to acts for this purpose in certain exceptional cases. A. Mistake does not of itself affect the validity of contracts at all (a). But mistake may be such as to prevent any real agreement from being formed; in which case the agreement is void both at law and in equity: or mistake may occur in the expression of a real agreement; in which case, subject to rules. of evidence, the mistake can be rectified. The jurisdiction to do this is peculiar to equity. There are also certain rules in the construction of contracts which are peculiar to equity, and are founded on the assumption that the expressions used do not correspond to the real intention. B. Contracts induced by misrepresentation are not void. To a certain extent at law, and to a considerable extent in equity, they are voidable at the option of the party misled. c. Contracts induced by fraud are not void, but voidable both at law and in equity at the option of the party deceived. D, E. Contracts entered into under coercion or undue influence are not void. If induced by direct personal coercion, they are voidable at law as well as in equity; if by other forms of compulsion or undue influence, in equity only, by the party on whom coercion or undue influence is exercised. These subjects have now to be considered in order. And first of Mistake. difficulties the The whole topic is surrounded with a great deal of confusion Mistake: in our books, though on the whole of a verbal kind, and more and embarrassing to students than to practitioners. Exactly the confusions same kind of confusion prevailed in the civil law (whence indeed attending some of it at least has passed on to our own) until Savigny subject. cleared it up in the masterly essay which forms the Appendix to the third volume of his System. The principles there established by him have been fully adopted by later writers (b). They appear to be in the main applicable to the law of England, and we shall accordingly be guided by them. In arrangement and detail, however, we shall consult the convenience of English practice and of our present special purpose. (a) Just as fear, merely as a state of mind in the party, is in itself immaterial. As Fear is to Coercion, so is Mistake to Fraud. Sav. Syst. 3. 116. (b) Some of his conjectural dealings with specific anomalies in the Roman texts are at least daring, A. General rule: Mistake The difficulties which have arisen as well with us as in the civil law may be accounted for under the following heads : (1.) Confusion of proximate with remote causes of legal consequences in other words, of cases where mistake has legal results of its own with cases where it determines the presence of some other condition from which legal results follow, or the absence of some other condition from which legal results would follow, or even where it is absolutely irrelevant. (2.) The assertion of propositions as general rules which ought to be taken with reference only to particular effects of mistake in particular classes of cases. Such are the maxim Non videntur qui errant consentire and other similar expressions, and to some extent the distinction between ignorance of fact and of law (a). (3.) Omission to assign an exact meaning to the term "ignorance of law" in those cases where the distinction between ignorance of law and ignorance of fact is material (the true rule, affirmed for the Roman law by Savigny, and in a slightly different form for English law by Lord Westbury (b), being that "ignorance of law" means only ignorance of a general rule of law, not ignorance of a right depending on questions of mixed law and fact, or on the true construction of a particular instrument). It is needless to point out in detail how these influences have operated on our books and even on judicial expressions of the law. We rather proceed to deal with the matter affirmatively on that which appears to us its true footing. A. Mistake in general. The general rule is that mistake as such has no legal effects at as such in- all. This may be more definitely expressed as follows: Where operative: an act is done under a mistake, the mistake does not either add anything to or take away anything from the legal consequences of such act either as regards any right of other persons or any liability of the person doing it, nor does it produce any special consequences of its own, unless knowledge of something which the mistake prevents from being known, or an intention necessarily depending on such knowledge, be from the nature of except the special (a) See Savigny's Appendix, Nos. VII., VIII. Syst. 3. 342, 344. (b) Cooper v. Phibbs, L. R. 2 H. L. at p. 170: to which the dicta in the later case of Earl Beauchamp v. Winn, L. R. 6 H. L. 223, really add little or nothing. the particular act a condition precedent to the arising of some nature of right or duty under it. the case knowledge condition precedent Special exceptions to the rule exist, but even these are founded is a on special reasons beside, though connected with, the mistake itself. con There are abundant examples to show the truth of this of legal proposition in both its branches. consequen ces. under First, mistake is in general inoperative as to the legal position As to the position of or liability of the party doing an act. We put aside, of course, the person all those cases where a liability attaches not to the doing of an acting act in itself, but to the doing of it knowingly. There, if the mistake. act is done without knowledge, the offence is not committed, and no liability arises. acts: no excuse. Apart from such cases as these, ignorance is as a rule no Wrongful excuse for a wrongful act even as regards a criminal liability (a), ignorance and certainly not as regards such as may be called quasi, in general criminal (under penal statutes) (b) or such as are purely civil. Thus ignorance of the real ownership of property is no defence. to an action of trover, except for carriers and a few other classes of persons exercising public employments of a like nature, who by the necessity of the case are specially privileged (c). Again, railway companies and other employers have in many cases been held liable for acts of their servants done as in the exercise of their regular employment, and without any unlawful intention, but in truth unlawful by reason of a mistake on the part of the servant: the act being one which, if the state of circumstances supposed by him did exist, would be within the scope of his lawful authority (d). Of course the servant himself is equally liable. (a) On this question, which cannot be discussed here, see Reg. v. Prince, L. R. 2 C. C. R. 154, the effect of which seems to be that a mistake of fact is no excuse unless it is on reasonable grounds and also such that if the facts were as believed the acts done would have been, not merely not a criminal offence, but lawful. Compare the language of Brett, J. (diss.) at p. 170 with the judgments of the majority and especially of Denman, J. at pp. 178-9. (b) That ignorance cannot be Here, indeed, it looks at pleaded in discharge of statutory (c) Fowler v. Hollins, Ex. Ch., (d) See the distinction explained and illustrated by Poulton v. L. & S. W. R. Co. L. R. 2 Q. B. 534, and several later cases: the last are Bayley v. Manchester, &c., Ry. Co. Ex. Ch. L. R. 8 C. P. 148 (employer liable); Bolingbroke v. Swindon Local Board, L. R. 9 C. P. 575 (employer not liable). |