I. Introduction

1. General effects of mistake:
a) Operative mistake: the contract is void. Claim in conversion against third parties.
b) Mispresentation etc.: voidable, unless there is some operative mistake. Bona fide purchasers for value may acquire property as long as the contract is not set aside.
There is a suit for damages in fraudulent misrepresentation.

2. Basics
a) In order to be legally operative (effective), the mistake must be about some material or fundamental matter going into the essence of the contract.
b) People who allege that they have been mistaken must be judged by their own actionr rather than by innermost thoughts; thus he must prove the mistake: Smith v. Hughes 1871


II. Legal consequences of mistake

1. Mistake at common law
a) Mistakes that nullify an apparently valid contract
aa) Mistake as to the existence of the subject matter: if at the time of the conclusion of the contract, unknown to both parties, the subject matter doesn't exist, the contract is void. Couturier v. Hastie 1856
However, contracts can be made upon the terms that one will be liable whether or not the subject matter exists - even though such a term is only implied: McRae v. Commonwealth Disposals Commission 1951
bb) Mistake as to physical possibility: both parties think what they are contracting about is physically possible although in fact it's not: Skeikh Bros. Ltd. v. Ochsner 1957
cc) Mistake about title: what's meant is mistake to private title (ownership); but not every mistake of law will be such:
Cooper v. Phibbs 1867 - this case sounded in equity as well (see below).
dd) Mistake as to the quality of the subject matter: 'error in substantia' - the thing contracted for is essentially different in quality or attributes from the thing as it was believed by both parties: Bell v. Lever Bros. 1932; Leaf v. International Galleries 1950
These cases indicate that such mistakes, however essential, are not treated operative at law.
b) Mistakes that nullify consensus
aa) Mistake about the terms of the contract: A thinks X, B thinks Y; if B knows what A thinks, 'offer and acceptance do not correspond'; this will be a unilateral mistake. Note the contrast to our way of thinking.
bb) Mistake about the identity of the subject matter: there are two things in existence and one party is thinking of one while the other party is thinking of the other; the parties are at cross-purposes, mistake is mutual:
Raffles v. Wichelhaus 1864
cc) Mistake about personal identity: where one party believes the other party to be some real person or entity other than the one with wich he is actually contracting, such a mistake is operative. However, if he does not regard the personality of his partner - being willing to contract with a non-existent entity - as a matter of importance, this will have no effect at all: Cundy v. Lindsay 1878; Ingram v. Little 1961; contrast:
King's Norton Metal Co. Ltd. v. Edridge, Merret & Co. Ltd. 1897
If the parties are present together at the time of the transaction there is a prima facie presumption that the person who alleges that he was mistaken did intend to contract with the actual person thus present to sight and hearing:
Phillips v. Brooks Ltd. 1919; Lewis v. Averay 1972

2. Mistake in equity
a) This is important because of the remedies: specific performance, rescission, and rectification. A mistake recognized in equity will make the contract voidable, not void.
b) Examples:
aa) Mistake about the attributes of the thing contracted for: Solle v. Butcher 1950
If the other party is innocent, even equity will not grant relief: Riverlate Properties Ltd. v. Paul 1975
bb) Mistake about title: equity will impose its own terms: Cooper v. Phibbs 1867 - see above.

3. Non est factum
a) This was a defence for people whose signature had been forged, or who were blind or illiterate and had been persuaded to sign away thing that they didn't intend to through misrepresentations by others about the nature of the documents signed.
b) It's still a defence, but the Lords restricted its availability: Saunders v. Anglia Building Society 1971
A prima facie burden lies on the signer to establish that in signing as he did he was not negligent. Therefore, it is now
essentially limited to blind or illiterate persons. The test is, 'Did the signer, having taken proper care to ascertain the purport of the transaction, know substantially what the effect of his signature would be? Was the document substantially, seriuosly or fundamentally different in ist purport from what the signer believed to be the case?'