Term Paper on "Role of Mistake in English Contract Law"

Term Paper 17 pages (5222 words) Sources: 3 Style: MLA

[EXCERPT] . . . .

Role of Mistake in English Contract Law and German Contract Law

INTRODUCTION verbal contract isn't worth the paper it is written on." - Samuel Goldwyn (1882-1974)

In They Never Said it, Paul F. Boller, Jr. And John George explain the Goldwyn's actual words are reportedly, "His verbal contract is worth more than the paper it's written on." Goldwyn was referring to Joseph M. Schenck, a movie executive regarded to be completely trustworthy. The introductory "misquote" when compared and contrasted to Goldwyns' actual words has been attributed to be one of a number of Goldwynisms his own staff created. This research paper, although not directly nor remotely related to Goldwyn, examines the concept of mistake, as it compares and contrasts the role of mistake in English Contract Law and German Contract Law. As this researcher examines components contributing to the content regarding contracts in this study effort, the intent is to present a trustworthy report that will confirm: When compared, the role of mistake in English contract law complements, more than contrasts, German Contract law.

During the course of this research effort, the following questions are explored:

What components contribute to the concept of mistake?

What are some specific ways mistake in English contract law complements and/or contrasts German contract law?

What is the most significant effect of mistake?

Mistake the following definitions of mistake range from contemporary (2008) to antique (1856): An unintentional act, omission, or error.

Mistakes are categorized as a Mistake of Fact, Mistake of Law, or mutual mistake. A mistake of fact occurs when a person believes that a condition or event exists when it does not. A mistake of law is made by a person who has knowledge of the correct facts but is wrong about the legal consequences of an act or event. A mutual mistake arises when two or more parties have a shared intention that has been induced by a common misbelief.

A mistake n. 1) an error in comprehending facts, meaning of words or the law, which causes one party or both parties to enter into a contract without understanding the obligations or results. Such a mistake can entitle one party or both parties to a rescission (cancellation) of the contract. A mistaken understanding of the law (as distinguished from facts) by one party only is usually no basis for rescission since "ignorance of the law is no excuse." 2) an error discovered to be incorrect at a later time.

MISTAKE, contracts. An error committed in relation to some matter of fact affecting the rights of one of the parties to a contract.

2. Mistakes in making a contract are distinguished ordinarily into, first, mistakes as to the motive; secondly, mistakes as to the person, with whom the contract is made; thirdly, as to the subject matter of the contract; and, lastly, mistakes of fact and of law. See Story, Eq. Jur. Sec. 110; Bouv. Inst. Index, h.t.; Ignorance; Motive.

3. In general, courts of equity will correct and rectify all mistakes in deeds and contracts founded on good consideration. 1 Ves. 317; 2 Atk. 203; Mitf. Pl. 116; 4 Vin. Ab. 277; 13 Vin. Ab. 41; 18 E. Com. Law Reps. 14; 8 Com. Digest, 75; Madd. Ch. Prac. Index, h.t.; 1 Story on Eq. Chapter 5, p. 121; Jeremy's Eq. Jurisd. B. 3, part 2, p. 358. See article Surprise.

4. As to mistakes in the names of legatees, see 1 Rop. Leg. 131; Domat, l. 4, t. 2, s. 1, n. 22. As to mistakes made in practice, and as to the propriety or impropriety of taking advantage of them, see Chitt. Pr. Index, h.t. As to mistakes of law in relation to contracts, see 23 Am. Jur. 146 to 166.

Although some may contend mistake developed uniformly, when compared to the duty to inform, a more intimate examination of mistake reveals this perception to be qualified. Civilian legal systems share a common origin, the evolution of the concept of mistake in the English and German legal traditions has dramatically differed. Concerning the English concept of mistake, even if some contend English law 'borrowed' from Pothier and the natural lawyers in the nineteenth century to secure a theoretical foundation for mistake, based on the autonomy of the will, so that it could be argued English law shares common Roman law origins with civilian legal systems, the comparison does not fulfill this contention. The English concept of mistake dramatically differs from its civilian counterparts.

One cannot assert mistake inextricably links to the validity of contract. If it can be inferred from a mistake the parties did not consent - no contract exists. "In the simplest sense, this is a question of fact: have the parties agreed and on what? If not, there is no agreement." The mistake touches on the heart of the matter, as mistake reportedly destroys the parties' consent. This theoretical explanation of mistake, traceable back to Roman law, as well as to Aristotelian and Thomistic, "analyses that the essence or end-purpose of the contract (what kind of contract, what is the object of the contract?) does not exist if a mistake has been made."

The creation of a contract is governed by fixed rules dictated by the law. If these roles are not complied with, the parties are not contractually bound."

In regard to the concept of contract, "a contract requires a meeting of the minds, which Roman law called a consensus ad idem. If one or both parties have been mistaken about an element of the contract, then there is no consensus ad idem."

The fact one or more parties have been mistaken about an element of the contract, nevertheless does not necessarily void a contract as this type rule could contribute to abuse.

II. MISTAKE CONSIDERATIONS

The two systems [English and German] start out from entirely different points-of-view."

Contracts and Mistakes

The English and German systems, as this section's introductory quote indicates, "start out from entirely different points-of-view."

As a number of common origins of mistake evolve from Roman law and the Aristotelian scholastic tradition, a diversity of legal theories about mistake and consequently contract law theory evolved from these common roots.

Mistake, albeit, developed along with theories regarding contractual validity and in general, in this regard, mistake serves as a good pointer for theories about contract law. In almost every country, under some circumstances, mistake renders the contract "void ab initio or voidable." At times, only a possible case for rectification of the error exists, however, in some instances, legal systems "provide for an action for damages available to the victim of mistake or to the other party if he suffered a prejudice by the invalidation of the contract."

The effects of a rule of law prove vital and are particularly so in matters of mistake, as the view a legal system takes toward this question relates its conception of the nature of contractual transactions. In Roman law, if error destroyed consent, only then would its effect render the transaction absolutely void. The scope of error (mistake) remained restricted primarily because effects of error were too rigorous and rigid.

English courts are reportedly reluctant to intervene in favour of the mistaken party due to the fact that at common law, mistake renders the contract void ab initio. Consequently, "such an effect results in prejudice to the parties and even to a third party who has acquired an interest in the subject-matter of the contract."

In English law, the right to an indemnity or damages may result from misrepresentation. In some civil law systems, "courts have extensive powers of avoidance for mistake.

The German and C.C., for instance, has abandoned the limited categories under which mistake was operative in Roman law...." contract which does not fulfil the legal rules is generally invalid and the party obligated under it possesses the right not to perform his contractual obligations. The effect of this is in itself clear and simple; however, historical development has complicated the process with various types' nullities, similar to each other, yet different in their effects.

Nullities in most contemporary laws originated, it seems, in Roman law. In the early civil law, the rule appears to have directed that no obligation could arise from a contract void of an essential element needed for its formation. To correct the civil law in cases where it did not secure justice, the matter frequently became complicated. When the praetor was unable directly to nullify a contract valid in law, he indirectly nullified it by utilizing various proceedings.... The case of an invalid contract appeared; however, this consisted of one which could be confirmed by the person for whose protection the nullity was established. In turn, various ways of setting aside contracts appeared; either praetorian remedy or tpso jure.... Little by little, in time, some differences between ways to set aside contracts became more substantial in some countries, while some did not change so dramatically.

L.G. Hanau NJW 1979, 721, case no 85 presents a relevant illustration of… READ MORE

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