Mistake in Contract Law: A Comprehensive Guide for Nigerian Law Students

Mistake is one of the most intricate vitiating factors in contract law, raising fundamental questions about when parties should be bound by their apparent agreements. If one or both parties enter into a contract under some misunderstanding or misapprehension about a fundamental fact, in what circumstances will the law permit them to escape from their obligations? This question lies at the heart of the doctrine of mistake.

The importance of mistake in Nigerian contract law cannot be overstated. In our commercial environment, parties frequently make assumptions about the subject matter of their contracts, the identity of those with whom they are contracting, or the quality of goods and services being exchanged. When these assumptions prove to be false, the law must balance competing interests: the need for certainty in commercial transactions on one hand, and the requirement for genuine consent on the other.¹

This article provides a comprehensive examination of mistake as a vitiating factor in Nigerian contract law, exploring the various categories of mistake, their legal consequences, and the remedies available to parties who find themselves in such situations. Understanding this area of law is crucial for second-year law students who must grasp not only the theoretical foundations but also the practical application of these principles in Nigerian courts.

The Nature and Scope of Mistake

Fundamental Principles

At common law, if a contract is entered into under a legally operative mistake, it is void ab initio. This means that the contract is treated as if it never existed, and no rights can be derived from it.² The severity of this consequence explains why courts have been historically cautious about finding that a mistake renders a contract void. After all, if contracts could easily be set aside for mistake, commercial certainty would be undermined, and parties would be unable to rely on their agreements.

However, the courts, in the exercise of their equitable jurisdiction, may grant specific relief against the consequences of mistake without declaring the contract a nullity. This dual approach—the common law rendering certain contracts void and equity providing more flexible remedies—creates a nuanced framework for dealing with mistakes in contractual relationships.

It is essential to understand that not every mistake will vitiate a contract. The law distinguishes between mistakes that are sufficiently fundamental to affect the validity of a contract and those that are merely incidental. As we shall see, only certain categories of mistake receive legal recognition.

Prerequisites for Operative Mistake

For a mistake to be legally operative and capable of affecting a contract, several conditions must be satisfied:

First, the mistake must be one of fact, not law. A mistake of law will generally be ineffective. This distinction reflects the ancient maxim ignorantia juris non excusat (ignorance of the law excuses no one). However, the boundary between mistakes of law and mistakes of fact can sometimes be difficult to draw, particularly where a statement of fact contains an implicit proposition of law.

Second, the mistake must exist at the moment the contract is concluded. A mistake that arises after the contract has been formed will not affect the validity of the contract itself, though it may give rise to other remedies such as discharge by frustration.³ This requirement was clearly established in Amalgamated Investments and Property Co. Ltd v John Walker.⁴

Third, the mistake must be sufficiently fundamental. Trivial errors or mistakes about matters that are peripheral to the contract will not suffice. The test is whether the mistake goes to the root of the contract, affecting the very substance of what was agreed. This requirement ensures that parties cannot escape from contracts merely because they have made poor bargains or failed to investigate thoroughly before contracting.

Types of Mistake

The law recognizes three principal types of mistake: common mistake, mutual mistake, and unilateral mistake. Each category has distinct characteristics and legal consequences, and it is vital to understand the differences between them.

Common Mistake

In common mistake, both contracting parties make the same mistake. Each knows the intention of the other and accepts it, but each is mistaken about some underlying and fundamental fact. For example, both parties might be unaware that the subject matter of their contract has already perished. The critical feature of common mistake is that there is genuine agreement between the parties—they are ad idem (of one mind)—but this agreement is based on a shared false assumption.

Where common mistake is pleaded, the presence of agreement is admitted. The rules of offer and acceptance are satisfied, and the parties are of one mind. However, owing to the common error as to some fundamental fact, the agreement is robbed of all efficacy. In other words, the common mistake nullifies consent, even though consent appeared to exist.

Mutual Mistake

In mutual mistake, the parties misunderstand each other and are at cross-purposes. For instance, A might intend to offer his Toyota Previa car for sale, but B believes that the offer relates to the Toyota Sienna car also owned by A. Unlike common mistake, where both parties share the same erroneous belief, in mutual mistake each party labours under a different misapprehension about what is being agreed.

Where mutual mistake is pleaded, the very existence of the agreement is denied. There is no real correspondence of offer and acceptance because the parties are not truly ad idem. The court’s approach to mutual mistake is objective: looking at the evidence from the standpoint of a reasonable third party, the court will decide whether any, and if so what, agreement must be taken to have been reached.

Unilateral Mistake

In unilateral mistake, only one of the parties is mistaken. The other party knows, or must be taken to know, of the mistake. For example, if A offers to sell his car for ₦500,000 but accidentally writes ₦50,000 in the written offer, and B, realizing the error, purports to accept, this would be a case of unilateral mistake.

Where unilateral mistake is pleaded, again the existence of the agreement is challenged. However, unlike in mutual mistake where the court’s approach is objective, in unilateral mistake the court’s approach is subjective. The innocent party is allowed to show the effect upon his mind of the error in the hope of avoiding its consequences. Because the other party knew or should have known of the mistake, it would be unconscionable to hold the mistaken party to the apparent agreement.

Common Mistake: Agreements Void at Common Law and in Equity

The Basic Principle

A common mistake has no effect whatsoever at common law unless it is such as to eliminate the very subject matter of the contract. In other words, the mistake must be one that empties the agreement of all content. This stringent test reflects the common law’s traditional reluctance to allow parties to escape from contracts that have been validly formed.

The principle has been applied primarily in cases dealing with res extincta (where the subject matter does not exist or has ceased to exist) and res sua (where the buyer already owns what he purports to buy).

Res Extincta: Non-existence of Subject Matter

It is well established that if, unknown to the parties, the specific subject matter of the agreement is in fact non-existent or has ceased to exist at the time of the contract, no contract whatsoever ensues. This rule is grounded in logic: one cannot contract to buy or sell something that does not exist.

The leading case is Couturier v Hastie,⁵ which concerned the sale of a cargo of corn supposed to be in transit from Salonica to the United Kingdom. Unknown to the parties, the corn had fermented during the voyage and had already been sold by the ship’s master at Tunis before the contract of sale was concluded. The court held that the buyer was not liable for the price of the cargo because the contract was void. In the nature of things, a contract to sell and deliver goods presupposes the existence of goods capable of delivery.

Similarly, in Strickland v Turner,⁶ X had bought and paid for an annuity upon the life of a person who, unknown to both buyer and seller, was already dead. It was held that X had got nothing for his money and that the total failure of consideration entitled him to recover the purchase price in full.

A related Nigerian case is Barrow, Lane, and Ballard Ltd v Phillip Phillips & Co,⁷ which applied similar principles. The case reinforced that where the very foundation of the contract—the existence of the subject matter—is absent, the contract cannot stand.

Another illustration is found in Galloway v Galloway,⁸ where a separation deed between a man and a woman was declared a nullity because it was made on the mistaken and common assumption that they were married to each other, when in fact no valid marriage existed. The supposition upon which the parties had proceeded—that the subject matter of the contract (the marriage) was in existence—was false, and therefore the contract was void.

Res Sua: Absence of Title in Seller

The principle applicable to res extincta has been extended in equity to the analogous cases of res sua. If A agrees to buy or take a lease from B of property which both parties believe to belong to B but which in fact belongs to A, the contract is of necessity a nullity, since B has nothing to sell or convey.

The seminal case is Cooper v Phibbs,⁹ where the appellant agreed to take a lease of a fishery from the respondent, although, unknown to both parties, it already belonged to the appellant himself. The House of Lords set the agreement aside on the ground that the common mistake rendered it void. However, the court exercised its equitable jurisdiction to impose terms: the respondent was granted a lien on the fishery for the money he had expended on its improvement. This demonstrates equity’s willingness to do justice between parties even when setting aside a void contract.

In Huddersfield Banking Co. Ltd v Henry Lister & Sons Ltd,¹⁰ Lister had mortgaged his mills and fixtures to a bank. He later converted his business into a limited company, which subsequently went into liquidation. The bank, as mortgagees, claimed entitlement to 35 looms in the mills. The agents of the bank and liquidator inspected the premises and agreed that the looms were not fixtures. On this assumption, they concurred in an order for sale by the liquidator. Later it appeared that the looms were in fact affixed to the mills when the mortgage was made and had subsequently been wrongfully separated. The bank applied to set aside the order, and the court did so on the ground of common mistake.

A Nigerian case applying similar principles is Abraham v Oluwa,¹¹ which recognized that agreements based on fundamentally false assumptions about ownership rights are void.

Mistake as to Quality: The Bell v Lever Bros Debate

One of the most controversial questions in the law of mistake is whether there exists an independent doctrine of common mistake outside the cases of res extincta or res sua. Specifically, can a mistake as to the quality of the subject matter be a legally operative mistake?

This issue was extensively discussed by the House of Lords in Bell v Lever Bros Ltd.¹² Lever Brothers, who had controlling shares in the Niger Company, appointed Bell as managing director for five years at an annual salary of £8,000. After three years, Bell’s services became redundant due to an amalgamation, and Lever Brothers agreed to pay him £30,000 as compensation for the loss of his employment. After paying the money, they discovered that Bell had committed several breaches of duty during his directorship which would have justified his dismissal without compensation. They sued for recovery of the £30,000 on the ground, inter alia, of common mistake, but failed.

The House of Lords held that there had been no mistake at law sufficient to render the contract void. The majority took a narrow view: the only mistakes sufficiently fundamental to vitiate a contract are those relating to the existence of the subject matter. A mistake as to quality, even if it would not have been made by a reasonable person and even if the quality is of central importance to one or both parties, will not render the contract void at common law.

The speeches in Bell v Lever Bros are capable of two interpretations:

The first interpretation (broader) suggests that a contract is void if both parties have proceeded on a false and fundamental assumption, irrespective of the character of the fact assumed to be true.

The second interpretation (narrower) suggests that for a false and fundamental assumption to be legally operative as mistake, it must refer to the existence or otherwise of the subject matter of the contract. In other words, only the assumption that the very subject matter exists is sufficiently fundamental to rank as operative mistake.

Subsequent cases have generally favored the narrower interpretation. In Solle v Butcher,¹³ A had agreed to let a flat to X at a yearly rental of £250. Both parties acted on the assumption that the flat, having been drastically reconstructed, was no longer controlled by the Rent Restrictions Act. They were mistaken; the maximum permissible rent was £140. After two years, X sought to recover the overpaid rent. The Court of Appeal held that even if the doctrine of frustration were capable of application to leases (which was doubtful), the contract in this case was not void at common law. The compulsory suspension of building did not strike at the root of the transaction.

Similarly, in Leaf v International Galleries,¹⁴ the plaintiff bought from the defendant a picture which they both mistakenly believed had been painted by Constable. The Court of Appeal agreed that the mistake, though fundamental in one sense, did not avoid the contract. The mistake related to quality rather than to the existence of the subject matter.

These cases suggest that the English courts have adopted a restrictive approach to common mistake at common law, confining it essentially to cases of res extincta and res sua. Nigerian courts have generally followed this approach, though they retain the flexibility afforded by equity to grant relief in appropriate circumstances.

Equitable Relief for Common Mistake

While the common law takes a restrictive view of common mistake, equity provides more flexible remedies. A contract founded upon a common mistake may entitle the innocent party to equitable relief in two principal respects:

First, equity may set aside the contract notwithstanding that it has been executed or whether it is void at common law or not. This was demonstrated in Cooper v Phibbs (discussed above), where equity set aside the agreement but imposed terms to achieve justice between the parties.

In Solle v Butcher, the Court of Appeal exercised its equitable jurisdiction to set aside the lease, even though it was not void at common law. However, to set aside the lease simpliciter would have been inequitable to the tenant, as it would have required his immediate dispossession. The tenant was therefore given a choice: to surrender the lease entirely or to remain in possession at the full rent that would have been permissible under the Rent Restrictions Act had the landlord served the statutory notice within the proper time limit.

Second, equity will rectify a written contract or deed that does not accurately record the agreement made by the parties. The essence of rectification is to bring a document which was expressed and intended to be in pursuance of a prior agreement into harmony with that prior agreement.¹⁵ This remedy is particularly important in Nigerian practice, where oral agreements are frequently reduced to writing and errors may occur in the transcription.

Rectification: Correcting Written Instruments

The Nature of Rectification

Rectification is an equitable remedy aimed at correcting a mistake in recording what the parties had intended. Where it is proved that, owing to a mistake, a document does not substantially represent the real intention of the parties, the court has jurisdiction not only to order rectification of the written agreement but also to order specific performance of it as rectified.¹⁶

In Craddock Bros v Hunt,¹⁷ a vendor orally agreed to sell to a purchaser a certain piece of property. By mistake, the written contract included an adjoining yard which the parties had exempted from the sale, and the subsequent conveyance actually conveyed this land to the purchaser. The court ordered that the conveyance be rectified to bring it in line with the parties’ actual agreement.

A Nigerian case illustrating this principle is Oyadiran v Baggett,¹⁸ where a covenant by the sublessee to build a factory and develop industrial units was mistakenly recorded as a covenant by the sublessor. The court ordered rectification to conform with the common intention of the parties.

Conditions for Rectification

For the court to exercise its equitable jurisdiction to grant an order of rectification, certain conditions must be fulfilled:

1. Antecedent Agreement or Common Intention

The plaintiff must establish a finally concluded agreement or common intention antecedent to the instrument which is sought to be rectified. The parties must have reached a final, complete agreement as to the terms of their contract. Importantly, the common intention need not have crystallized into a legally enforceable agreement prior to the written document. What is required is not necessarily a prior contract, but a prior common intention.¹⁹

In Joscelyne v Nissen,²⁰ an oral agreement between a father and daughter provided that the daughter would pay gas and electricity bills as part of the consideration for the transfer of his business. These terms were mistakenly omitted from the subsequent written agreement. The court held that the document could be rectified to include the missing terms, even though the parties had not entered into a prior binding agreement. The oral bargain disclosed the common intention of the parties, which was sufficient.

2. Clear and Convincing Evidence

The burden of proving the common continuing intention lies upon the party claiming rectification. The party must adduce evidence that the terms of the written contract do not accurately record the common intention of the parties at the time of execution. This is a heavy burden, reflecting the court’s respect for written instruments and the importance of certainty in commercial transactions.

3. Continuation of the Common Intention

The antecedent agreement or common intention must be clear and unequivocal and must have continued unchanged until the execution of the final document. It must be shown that the alleged common intention, though once undoubtedly reached, continued down to the time when the instrument was executed.²¹

In Rose v Pim,²² the court emphasized that proof that the parties varied their original intention and that the instrument represents what they finally agreed is fatal to a suit for rectification. This requirement ensures that rectification is used only to correct genuine errors in recording, not to rewrite contracts that the parties have deliberately modified.

4. Common Mistake

As a general rule, rectification can only be granted where the mistake which led to the erroneous recording is common to both parties. The issue relates not to the individual intention of the parties, but to their common intention. If the defendant can satisfy the court that he understood the agreement to be exactly what was stated in the written instrument, rectification will be excluded.²³

However, there is an exception to this rule. Rectification may be granted even where only one party was mistaken, if the plaintiff proves beyond reasonable doubt that the agreement was intended to contain a term beneficial to himself, but that the defendant allowed it to be concluded without that term, knowing that the plaintiff was ignorant of the omission.²⁴ This exception is designed to prevent unconscionable conduct.

5. Mistake of Fact, Not Law

A common mistake that will sustain an action for rectification must be one of fact and not of law. A mistake as to the legal effect of a document will not generally ground rectification, though the distinction between mistakes of fact and mistakes of law can be difficult to draw in practice.

Rectification in Nigerian Practice

Nigerian courts have applied the principles of rectification in numerous cases, particularly in transactions involving land, which form a substantial part of civil litigation in Nigeria. The remedy is especially important given the prevalence of oral agreements in Nigerian commercial practice and the subsequent reduction of these agreements to writing, often by parties without legal training.

The case of The Vessel “Leona II” v First Fuels Ltd²⁵ reinforced the requirements for rectification in Nigerian law, emphasizing that the court must be satisfied that there was a prior common intention that differed from what was recorded in the written instrument.

Mutual Mistake: The Objective Test

The Legal Framework

At common law, mutual mistake does not per se nullify a contract. The principle was stated by Blackburn J in Kennedy v Panama Royal Mail Co:²⁶ “a mutual mistake is wholly immaterial at common law unless it results in a complete difference in substance between what the mistaken party bargained for and what in fact he will obtain if the contract is fulfilled.”

When parties are at cross-purposes, the question is not what the parties had in their minds, but what reasonable third parties would infer from their words and conduct. The court will determine “the sense of the promise”—it determines whether a sensible third party would take the agreement to mean what A understood it to mean, or what B understood it to mean, or whether indeed any meaning can be attributed to it at all.

Application of the Objective Test

If all available evidence—statements and conduct of the parties, relevant documents and transactions—would make a reasonable man infer the existence of a contract in a given sense, the court will hold that the contract in that sense is binding upon both parties, notwithstanding the material mistake. The apparent contract will stand.

In Wood v Scarth,²⁷ the defendant offered in writing to let a public house to the plaintiff for £63 a year. The plaintiff, after an interview with the defendant’s clerk, accepted the offer by letter. The defendant intended that a premium of £500 should be payable in addition to the rent and believed that the clerk had made this clear. The plaintiff, however, believed that his only financial obligation was the payment of rent. It was held that the apparent contract must stand. The mistake of the defendant could not gainsay what would obviously be inferred from the acceptance of his exact offer.

Similarly, in Scott v Littledale,²⁸ the objective approach led to the enforcement of the apparent contract against the mistaken party.

However, if it is impossible to impute any definite agreement to the parties—if the evidence is so conflicting that there is nothing sufficiently solid from which to infer a contract in any final form—the court must declare that no contract whatsoever has been created. The purported contract is void on the ground of mutual mistake.

The Ambiguity Cases

In Scriven Bros & Co v Hindley & Co,²⁹ A made an offer to B which was ambiguous in its terms. B accepted the offer in a different sense from that intended by A. The court held that unless an objective construction required otherwise, B could effectively maintain that there was no binding contract. The case involved an auction where the auctioneer, through ambiguous conduct, led the bidder to believe he was bidding on hemp when in fact he was bidding on tow (a much less valuable commodity). The court held there was no contract because the ambiguity was such that no reasonable person could determine what was actually being offered.

The famous case of Raffles v Wichelhaus³⁰ provides another illustration. A agreed to buy and B agreed to sell a consignment of cotton to arrive “ex Peerless from Bombay.” Unknown to both parties, two ships called Peerless sailed from Bombay, one in October and another in December. It was held that the buyer was not liable to accept cotton despatched by the December ship. The court found that it was open to the defendant to show that the contract was ambiguous and that he intended the October ship. Because of the ambiguity, no binding contract could be inferred.

Contrast this with Tamplin v James,³¹ where despite the defendant’s mistaken belief about what property was being sold at auction, the court held him to the contract because there was no ambiguity in the particulars of sale, and a reasonable person would have understood exactly what was being offered.

Nigerian Approach to Mutual Mistake

A Nigerian case that applied these principles is S. Nasser & Sons Nig. Ltd v Lagos Executive Development Board,³² which examined whether the parties were truly ad idem given the circumstances of their negotiations. The court applied the objective test to determine whether a reasonable person would have concluded that an agreement had been reached.

Equitable Intervention in Mutual Mistake Cases

Equity follows the law in holding that a mutual mistake does not, as a matter of principle, nullify a contract. In general, therefore, a party is not allowed to obtain rectification or rescission of a contract, or to resist its specific performance, merely on the ground that he understood it in a sense different from that determined by the court.³³

However, since the remedy of specific performance is exceptional and discretionary, equity may, if the occasion warrants, refuse to grant a decree against the mistaken party. Everything depends upon the particular circumstances of each case.

In Malins v Freeman,³⁴ the defendant bid for one lot at an auction under the impression that he was bidding for another. Though he was liable at law, the court held in its equitable jurisdiction that specific performance should not be decreed against him.

In Swaisland v Dearsley,³⁵ a freehold estate subject to an existing tenancy had been bought by the defendant at auction under the honest but mistaken belief that the rent stated in the particulars referred to only half of the land. Had he read the particulars carefully, he could have discovered the truth. Nevertheless, a bill for specific performance was dismissed.

These cases illustrate equity’s willingness to refuse its discretionary remedy of specific performance where the defendant’s mistake, though not sufficient to render the contract void at law, makes it unconscionable to enforce the contract against him.

Unilateral Mistake: The Subjective Approach

The General Principle

In unilateral mistake, only one party is entering into the contract under a mistake, and the other party either knows or is presumed to know that the first party is labouring under a mistake. At common law, the effect of unilateral mistake is to render the contract void.

Unlike mutual mistake (where the court applies an objective test), the court’s approach to unilateral mistake is subjective. The court considers the actual belief and intention of the person making the mistake, not what a reasonable person would have thought or believed.

In Webster v Cecil,³⁶ Cecil had already refused to sell his land to Webster for £2,000. He then wrote a letter offering to sell for £1,250 (having mistakenly written this instead of £2,250). Webster accepted by return of post. When Cecil immediately gave notice of the error, Webster sued for specific performance. It was held that knowledge of the mistake was clearly to be imputed to Webster (given the prior refusal to sell at £2,000), and therefore the decree was refused.

A similar case is Hartog v Colin & Shields,³⁷ where the defendants, by a clerical error, offered to sell hare skins at a certain price per pound, when they intended to offer them at that price per piece (there being three pieces to a pound). The plaintiff, who was in the trade and must have realized the error, purported to accept. It was held that there was no contract because the plaintiff knew that the offer did not represent the defendants’ true intention.

The Presumption and Burden of Proof

The prima facie presumption applicable to unilateral mistake is that, despite the mistake, a contract has been concluded between the parties. In other words, the law presumes that a person intends to contract with the party with whom he has apparently contracted. The onus of rebutting this presumption lies upon the party who pleads mistake.

To discharge this burden, he must prove that:

1. He intended to deal with some person other than the person with whom he has apparently made a contract;
2. The other party was aware of his intention;
3. At the time of negotiating the agreement, he regarded the identity of the contracting party as a matter of crucial importance; and
4. He took reasonable steps to verify the identity of that party.

Mistake as to Identity

The majority of cases in which unilateral mistake has been raised involve mistaken identity. These cases raise particularly difficult questions about when identity is sufficiently important to vitiate consent.

Condition 1: Intention to Contract with Someone Else

The mistaken party must establish that he intended to deal with some person other than the person with whom he has apparently made a contract. This requirement presupposes a confusion between two distinct entities. If this is not the case, there is no operative mistake.

In King’s Norton Metal Co. Ltd v Edridge, Merrett & Co. Ltd,³⁸ a rogue named Wallis set up a fictitious company called “Hallam & Co” with impressive letterhead suggesting it was a substantial business. He ordered goods on credit from the plaintiffs using this letterhead. When he failed to pay, he sold the goods to the defendants, who bought in good faith. The plaintiffs sued the defendants, claiming the contract with Wallis was void for mistake as to identity.

The court held that there was no mistake as to identity. The plaintiffs intended to deal with the writer of the letters, whoever that might be. They were not mistaken about the identity of their contracting party; they were merely mistaken about his attributes (his creditworthiness). Since there was a valid contract between the plaintiffs and Wallis, property in the goods passed to him, and he could convey good title to the innocent defendants.

To establish mistake as to identity, the party must prove not merely that he did not intend to contract with the person with whom the apparent contract was concluded, but also that there was a third identifiable person with whom he did intend to contract.

Condition 2: Knowledge of the Mistake

The mistaken party must prove that the other party was aware of the mistake. A person cannot constitute himself a contracting party with one whom he knows or ought to know has no intention of contracting with him. An offer can be accepted only by the person to whom it is addressed.

In Boulton v Jones,³⁹ the defendant had been in the habit of dealing with one Brocklehurst. Brocklehurst sold his business to the plaintiff but did not notify the defendant. The defendant sent an order for goods to Brocklehurst’s former business address, not knowing of the change of ownership. The plaintiff supplied the goods. It was held that the defendant was not liable to pay because the offer was addressed to Brocklehurst, not to the plaintiff, and the plaintiff knew this.

However, offer and acceptance here must be understood in an objective sense. The test is not merely “Did the offeror intend to contract with the person with whom the offer was made?” but also “How would a reasonable man in the position of the offeree have interpreted the offer?”

In Upton-on-Severn R.D.C. v Powell,⁴⁰ the defendant mistakenly sent for the Upton fire brigade instead of the Pershore fire brigade (in whose area he lived). The call was accepted in good faith by the Upton brigade. It was held that the defendant was contractually bound to pay for their services despite his mistake, because a reasonable person in the fire brigade’s position would have believed the call was intended for them.

Condition 3: Identity as a Matter of Crucial Importance

The mistaken party must show that at the time of negotiating the agreement, he regarded the identity of the contracting party as a matter of crucial importance, and that this was apparent from his conduct during the negotiations.

The leading case is Cundy v Lindsay,⁴¹ where the respondents received an order for goods from one Blenkarn, who gave his address as “37 Wood Street, Cheapside” and imitated the signature of a respectable firm named Blenkiron & Co., who were known by reputation to the respondents and carried on business at 123 Wood Street. The respondents were fraudulently induced to send goods to Blenkarn’s address. Blenkarn sold the goods to innocent purchasers (the appellants). The respondents sued for the return of the goods.

The House of Lords held that the respondents were entitled to succeed. They had intended to contract with Blenkiron & Co., not with Blenkarn. Blenkarn knew that the respondents thought they were entering into a contract with Blenkiron & Co. The contract was therefore void ab initio, and no title passed to the appellants.

The Inter Praesentes Problem

Where the contract has been concluded inter praesentes (face-to-face), the courts are more readily disposed to view the mistake as one of attribute rather than identity. A mistake as to an attribute of another will not, as a general rule, be sufficient to vitiate consent. In such cases, the contract is merely voidable for fraud rather than void for mistake.

In Phillips v Brooks Ltd,⁴² a rogue entered the plaintiff’s jewelry shop, selected pearls and a ring, and wrote a cheque for £3,000. Before allowing him to take the goods, the plaintiff asked his name. The rogue replied “Sir George Bullough” and gave an address in St. James’s Square. The plaintiff knew of Sir George Bullough and his address, and allowed the rogue to take the ring (though not the pearls). The rogue pawned the ring to the defendants, who took it in good faith. The plaintiff sued to recover the ring.

The court held that the contract was not void for mistake of identity but merely voidable for fraud. The plaintiff intended to contract with the person present in the shop, whoever he was. The rogue’s representation about his identity related only to his attributes (creditworthiness), not to his identity. Since the contract was voidable rather than void, the rogue obtained voidable title, and the defendants, who took in good faith before the contract was avoided, obtained good title.

This decision was followed in Lewis v Averay,⁴³ where a rogue, pretending to be Richard Greene (a well-known actor), bought the plaintiff’s car and sold it to the defendant, an innocent purchaser. The Court of Appeal held that the contract was voidable for fraud, not void for mistake. The plaintiff intended to contract with the person physically present, and his mistake related only to that person’s attributes.

However, Ingram v Little⁴⁴ appears to take a different approach. Two sisters sold their car to a rogue who represented himself as P.G.M. Hutchinson of Stanstead House, Stanstead Road, Caterham. Before parting with the car, the sisters insisted on checking this identity in a telephone directory. Finding the name and address listed, they allowed the rogue to take the car. He sold it to the defendants, innocent purchasers. The Court of Appeal (by a majority) held that the contract was void for mistake of identity. The sisters’ insistence on verification showed that identity was crucial to them.

Ingram v Little has been criticized as inconsistent with Phillips v Brooks and Lewis v Averay, and its correctness is doubtful. The better view, supported by the majority of authorities, is that in face-to-face transactions, there is a strong presumption that the seller intends to deal with the person physically present, and mistakes about that person’s identity will usually be treated as mistakes of attribute, rendering the contract voidable for fraud rather than void for mistake.

Condition 4: Reasonable Steps to Verify Identity

Even if the first three conditions are satisfied, the plaintiff must show that he took reasonable steps to verify the identity of the party with whom he was dealing. What amounts to reasonable steps is a question of fact to be decided in light of the circumstances of each case.

In Phillips v Brooks and Lewis v Averay, the respective plaintiffs’ attempts to verify identity were held to be inadequate. However, in Ingram v Little, the sisters’ checking of the telephone directory was deemed sufficient (though this may be questioned given the ease with which such information can be falsified).

The requirement to take reasonable verification steps reflects a policy that parties should not be able to avoid contracts too easily by claiming mistake. If a party fails to take even minimal precautions to verify the other’s identity when identity is allegedly crucial, he should not be allowed to rely on mistake.

Equitable Intervention in Unilateral Mistake

In cases of unilateral mistake, if one party, to the knowledge of the other, is mistaken as to the fundamental character of the offer, the apparent contract is a nullity at common law. Equity follows the law in admitting that the contract is void, but may intervene by formally setting the contract aside or by refusing specific performance where fraud, misrepresentation, or unfair dealing on the part of the other party is shown.⁴⁵

Furthermore, rectification may be granted if the plaintiff proves beyond reasonable doubt that the agreement was intended to contain a term beneficial to himself, but that the defendant allowed it to be concluded without that term, knowing that the plaintiff was ignorant of the omission.⁴⁶

In Roberts & Co Ltd v Leicestershire C.C.,⁴⁷ the plaintiffs agreed to erect a school for the defendant, with completion in 18 months. The contract submitted to and executed by the plaintiff contained a completion period of 30 months, which the defendant’s officials had substituted without informing the plaintiff. When the plaintiff learned of this, they brought an action for rectification, which was granted.

In certain cases where rectification is sought on grounds of unilateral mistake, the court may give the defendant an election: to accept rectification or have the contract rescinded.⁴⁸

Documents Mistakenly Signed: Non Est Factum

The Doctrine Explained

The plea of non est factum (literally “it is not my deed”) permits one who has signed a written document that is essentially different from what he intended to sign to plead that, notwithstanding his signature, the document is not his deed in contemplation of law. Although the term properly applies to deeds, it is equally applicable to other written documents.

The basis of the plea is lack of consent, which makes the contract a complete nullity. The doctrine originated in medieval common law relating to deeds and was extended in the 16th century to defendants who could not read (whether owing to illiteracy or blindness), enabling them to escape liability upon proof that the written terms of the deed did not correspond with its effects as explained before execution.

In Foster v Mackinnon,⁴⁹ the scope of non est factum was extended to unsealed contracts and to situations where an educated person, to whom no negligence is attributable, has failed to scrutinize the document he has signed. In that case, Mackinnon, “a gentleman far advanced in years,” was fraudulently induced to indorse a bill of exchange for £3,000 on the assurance that it was a guarantee similar to one he had previously signed. Later the bill was indorsed for value to Foster, who took it in good faith. It was held that the defense of non est factum was available to Mackinnon because he never intended to make such a contract and had been guilty of no negligence.

Scope and Limitations

The plea of non est factum must be confined within narrow limits if the confidence of third parties who normally rely upon the authenticity of signatures is not to be eroded. A heavy burden of proof is placed upon the party invoking it.

The defense will not avail a person merely because he is too lazy or too busy to read through a document before signing it, or because it contains objectionable terms whose legal effect he is unaware of.⁵⁰ The signatory must show that he took reasonable care in the circumstances, and that despite such care, he was genuinely mistaken about the fundamental nature of the document.

The Test: Radical or Fundamental Difference

A crucial question in determining whether non est factum is available is the degree of difference that must exist between the signed contract and what the mistaken party intended to sign.

Earlier cases attempted to distinguish between mistakes as to the “character” or “nature” of a document (which would ground the defense) and mistakes as to the “contents” of a document (which would not). Under this theory, in Howatson v Webb,⁵¹ the defense failed because a conveyance and a mortgage belonged to the same legal class. But in Foster v Mackinnon, it succeeded because a bill of exchange and a guarantee belonged to different classes.

However, this distinction was rejected by the House of Lords in Saunders v Anglia Building Society⁵² (commonly known as Gallie v Lee). The court held that the test should be whether there is a “radical,” “essential,” “fundamental,” or “serious” or “very substantial difference” between the document signed and that which the person signing intended to sign. The seriousness of the mistake is a matter of substance, to be judged by the difference in practical result rather than by difference in legal character.

In Saunders, a 78-year-old widow gave the deeds of her leasehold house to her nephew so that he might raise money on it, on condition that she should remain in occupation until she died. A document was prepared which assigned the leasehold by way of sale to the defendant (a dishonest friend of the nephew), not by way of gift to the nephew. When the defendant took the document to the plaintiff for signature, she was unable to read it (having broken her glasses) and asked what it was. The defendant told her it was a deed of gift to her nephew, and she executed it. The defendant mortgaged the house to a building society and failed to pay instalments. The plaintiff sued for a declaration that the assignment was void, invoking non est factum.

The House of Lords rejected the claim. The paramount consideration was the “object of the exercise.” The plaintiff’s object was to enable the assignee to raise a loan on the security of the property for the benefit of her nephew. This object would have been attained under the signed document had the defendant acted honestly. Therefore, the document was not fundamentally different from what the plaintiff believed she was signing.

Nigerian Cases on Non Est Factum

Nigerian courts have applied the doctrine of non est factum in several cases, though generally with caution given the need to protect innocent third parties who rely on signed documents.

In Sylvester Egbase v Oriareghan,⁵³ the respondent, needing money urgently, borrowed ₦500 from the appellant. They entered into a conditional sale agreement for the respondent’s house for ₦500, with the respondent reserving the right to repurchase within six months. When the respondent could not repurchase within the period, a new agreement made him the appellant’s tenant at ₦15 monthly rent. After three months, the respondent defaulted, claiming the transaction was a pledge, not a sale. He pleaded non est factum.

The trial court refused the plea. The Court of Appeal reversed, but the Supreme Court restored the trial court’s judgment. The court held that the respondent was not mistaken about the nature of the agreement, as it had been read and interpreted to him by his solicitor before he signed. The Supreme Court emphasized that non est factum cannot be used by parties who, with full knowledge, enter into agreements they later regret.

In Awosile v Sotunbo,⁵⁴ the court carefully examined the requirements for non est factum and emphasized that the plea must be supported by evidence that the party took reasonable care and that the mistake was as to the fundamental nature of the document.

Negligence and Non Est Factum

A critical question is whether the plea of non est factum will be withheld from a party if the mistake was due to his own negligence. It was stated unambiguously in Foster v Mackinnon that a signatory is barred by his negligence from pleading his mistake against an innocent third party who has acted to his loss upon the faith of the document. Negligence in this context means simply carelessness.

The Court of Appeal in Carlisle and Cumberland Banking Co. v Bragg⁵⁵ held that negligence mattered only where the instrument signed was a negotiable instrument. However, this was overruled in Saunders, where the House of Lords held that negligence is material in all cases of non est factum, not only those involving negotiable instruments.

Even if the document signed is essentially different from what the signatory intended to sign, he will not be entitled to disown his signature unless he proves that he exercised reasonable care. What is reasonable care will depend on the circumstances of the case and the nature of the document.

In Saunders, Mrs. Gallie was held not to have been negligent because she had broken her glasses and had very little capacity for understanding legal documents and property transactions. However, the court also held that the document she signed was not radically different from what she thought she was signing.

As a general rule, if a person of full understanding and capacity forbears or carelessly omits to read what he signs, the defense will not avail him.⁵⁶

Lord Wilberforce in Saunders acknowledged that while the plea must be confined within narrow limits, it should remain available for the relief of persons who, through illiteracy, senility, or disability, are not capable of both reading and sufficiently understanding the document to detect a fundamental difference between the actual document and the document as believed.

Documents Signed in Blank

The defense of non est factum is not strictly applicable to a document signed in blank (as opposed to one which, as signed, imposes some liability on the signatory).⁵⁷ However, where one person signs a document in blank, leaving it to another to fill in the terms of the contract in accordance with an oral agreement reached between them, he will not be liable if terms are inserted without his authority which do not accord with that agreement. In such cases, the contract is completely void, as there is no consensus ad idem.

Requirements for Successful Plea

For the plea of non est factum to be successfully invoked, the following conditions must be fulfilled:

First, the document must have been signed by mistake owing to another’s fraud or misrepresentation.

Second, the document signed must be radically, essentially, or fundamentally different from the document which the person signing intended to sign.

Third, the person making the plea must not have been negligent in signing the document.

The effect of a successful plea of non est factum is that the transaction contained in the document is not merely voidable against the person who procured its execution, but is entirely void into whosoever hands the document may come. This reflects the seriousness of the plea and explains why courts require strict proof before allowing it.

Practical Implications and Advice for Nigerian Law Students

Understanding the Distinctions

For second-year law students, mastering the law of mistake requires careful attention to the distinctions between:

1. Common, mutual, and unilateral mistake: These categories have different tests (objective vs. subjective) and different consequences (void vs. voidable).
2. Mistake at common law and in equity: Common law takes a restrictive approach, generally rendering contracts void only for res extincta and res sua. Equity provides more flexible remedies, including rescission on terms and rectification.
3. Mistakes as to identity and mistakes as to attributes: Only mistakes as to identity (in limited circumstances) will render a contract void. Mistakes as to attributes render a contract merely voidable for fraud.
4. Void and voidable contracts: This distinction is crucial for determining the rights of third parties. If a contract is void, no title passes and third parties acquire no rights. If it is merely voidable, third parties who take in good faith before avoidance acquire good title.

Exam and Practice Tips

When analyzing a problem involving mistake:

1. Identify the type of mistake: Is it common, mutual, or unilateral? This determines which test applies.

2. Apply the correct legal test:

• For common mistake: Does it relate to res extincta or res sua? If not, is it a mistake as to quality (rarely operative at common law)?
• For mutual mistake: Would a reasonable person be able to determine what was agreed? Is there fatal ambiguity?
• For unilateral mistake: Does the mistaken party satisfy all four conditions (intention to contract with someone else, other party’s knowledge, identity crucial, reasonable verification steps)?

3. Consider both common law and equity: Even if the mistake is not operative at common law, equitable remedies (rescission, rectification, refusal of specific performance) may be available.

4. Analyze third-party rights: If the contract is void, third parties acquire no rights. If it is voidable, consider whether it has been affirmed or whether a third party has acquired rights in good faith before avoidance.

5. Examine the evidence carefully: Mistake cases often turn on questions of fact. What did each party know? What would a reasonable person have understood? Was reasonable care taken?

Policy Considerations

Students should also understand the competing policy considerations underlying the law of mistake:

On one hand, the law must protect parties who have not genuinely consented to the terms of their apparent contracts. The requirement of genuine consent is fundamental to contract law.

On the other hand, the law must protect the security of transactions and the interests of third parties who rely on apparent contracts. If mistakes could too easily vitiate contracts, commercial certainty would be undermined.

The restrictive approach to common mistake at common law reflects the latter concern, while equity’s more flexible approach reflects the former. This dual system allows courts to balance these competing interests on the facts of each case.

Conclusion

Mistake remains one of the most challenging areas of Nigerian contract law, requiring students and practitioners to navigate between common law rules and equitable principles, between objective and subjective tests, and between the competing demands of fairness to individual parties and certainty in commercial transactions.

The law has evolved from the absolute approach of Paradine v Jane (where contractual obligations were regarded as absolute) to the more nuanced framework established by cases such as Taylor v Caldwell, Bell v Lever Bros, Solle v Butcher, and Saunders v Anglia Building Society. Nigerian courts have generally followed English precedents in this area while adapting them to local circumstances and commercial realities.

For law students, thorough understanding of this topic requires not only memorization of rules and cases but also appreciation of the underlying principles and policies. The ability to distinguish between different types of mistake, to apply the appropriate legal tests, and to identify available remedies—both at common law and in equity—is essential for success in examinations and in legal practice.

As Nigeria’s economy continues to develop and commercial transactions become increasingly complex, disputes involving mistake are likely to become more sophisticated. Future lawyers must be equipped not only with knowledge of existing doctrines but also with the analytical skills to apply these doctrines to novel situations and to argue for appropriate development of the law where justice requires.

The interaction between mistake and other vitiating factors—particularly misrepresentation and duress—also merits careful study. While mistake focuses on erroneous beliefs existing at the time of contracting, misrepresentation involves false statements inducing such beliefs, and duress involves improper pressure vitiating true consent. Understanding how these doctrines complement and differ from one another is crucial for comprehensive mastery of contract law.

Finally, students should remember that the law of mistake, like all areas of contract law, ultimately serves to do justice between parties while maintaining the integrity and predictability of the legal system. The tension between these objectives—doing justice in individual cases and maintaining systemic predictability—is never fully resolved but must be balanced anew in each case. This balancing act lies at the heart of what makes contract law both challenging and intellectually rewarding.

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Footnotes

1. See generally I.E. Sagay, Nigerian Law of Contract (2nd edn, Spectrum Books 2000). ↩

2. Couturier v Hastie (1852) 8 Exch 40. ↩

3. See the article on discharge by frustration for detailed discussion. ↩

4. Amalgamated Investments and Property Co. Ltd v John Walker [1976] 3 All ER 509. ↩

5. Couturier v Hastie (1852) 8 Exch 40. ↩

6. Strickland v Turner (1852) 7 Exch 208. ↩

7. Barrow, Lane, and Ballard Ltd v Phillip Phillips & Co [1929] 1 KB 574. ↩

8. Galloway v Galloway (1914) 30 TLR 531. ↩

9. Cooper v Phibbs (1867) LR 2 HL 149. ↩

10. Huddersfield Banking Co. Ltd v Henry Lister & Sons Ltd [1895] 2 Ch 273. ↩

11. Abraham v Oluwa (1957) 17 NLR 123. ↩

12. Bell v Lever Bros Ltd [1932] AC 161. ↩

13. Solle v Butcher [1950] 1 KB 671. ↩

14. Leaf v International Galleries [1950] 2 KB 86. ↩

15. Lovell & Christmas Ltd v Wall (1911) 104 LT 85, 88. ↩

16. The Vessel “Leona II” v First Fuels Ltd (2002) 18 NWLR (Pt 799) 439. ↩

17. Craddock Bros v Hunt [1923] 2 Ch 136. ↩

18. Oyadiran v Baggett [1962] 1 All NLR 96. ↩

19. See Joscelyne v Nissen [1970] 2 QB 86. ↩

20. Ibid. ↩

21. Rose v Pim [1953] 2 QB 450. ↩

22. Ibid. ↩

23. Riverlate Properties Ltd v Paul [1975] Ch 133. ↩

24. Roberts & Co Ltd v Leicestershire C.C. [1961] Ch 555, 573. ↩

25. The Vessel “Leona II” v First Fuels Ltd (2002) 18 NWLR (Pt 799) 439. ↩

26. Kennedy v Panama Royal Mail Co (1867) LR 2 QB 580, 587. ↩

27. Wood v Scarth (1858) 1 F & F 293. ↩

28. Scott v Littledale (1858) 8 E & B 815. ↩

29. Scriven Bros & Co v Hindley & Co [1913] 3 KB 564. ↩

30. Raffles v Wichelhaus (1864) 2 H & C 906. ↩

31. Tamplin v James (1879) 15 Ch D 215. ↩

32. S. Nasser & Sons Nig. Ltd v Lagos Executive Development Board [1959] FSC 242. ↩

33. Tamplin v James (1879) 15 Ch D 215. ↩

34. Malins v Freeman (1837) 2 Keen 25. ↩

35. Swaisland v Dearsley (1861) 29 Beav 430. ↩

36. Webster v Cecil (1861) 30 Beav 62. ↩

37. Hartog v Colin & Shields [1939] 3 All ER 566. ↩

38. King’s Norton Metal Co. Ltd v Edridge, Merrett & Co. Ltd (1897) 14 TLR 98. ↩

39. Boulton v Jones (1857) 2 H & N 564. ↩

40. Upton-on-Severn R.D.C. v Powell [1942] 1 All ER 220. ↩

41. Cundy v Lindsay (1878) 3 App Cas 459. ↩

42. Phillips v Brooks Ltd [1919] 2 KB 243. ↩

43. Lewis v Averay [1972] 1 QB 198. ↩

44. Ingram v Little [1961] 1 QB 31. ↩

45. Webster v Cecil (1861) 30 Beav 62. ↩

46. Roberts & Co Ltd v Leicestershire C.C. [1961] Ch 555. ↩

47. Ibid. ↩

48. Paget v Marshall (1884) 28 Ch D 255; Garrard v Frankel (1862) 30 Beav 445. ↩

49. Foster v Mackinnon (1869) LR 4 CP 704. ↩

50. Blay v Pollard & Morris [1930] 1 KB 628. ↩

51. Howatson v Webb [1907] 1 Ch 537. ↩

52. Saunders v Anglia Building Society [1971] AC 1004 (also known as Gallie v Lee). ↩

53. Sylvester Egbase v Oriareghan (1985) 2 NWLR (Pt 10) 884. ↩

54. Awosile v Sotunbo (1992) 5 NWLR (Pt 243) 514. ↩

55. Carlisle and Cumberland Banking Co. v Bragg [1911] 1 KB 489. ↩

56. See Awosile v Sotunbo (1992) 5 NWLR (Pt 243) 514; Egbase v Oriareghan (1985) 2 NWLR (Pt 10) 884. ↩

57. United Dominion Trusts Ltd v Western [1976] QB 513. ↩