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Mistake

money, parties, court, paid, bill, law and holder

MISTAKE has been defined as an unintentional act, omission, or error arising from ignorance, surprise, imposition, or misplaced confidence. It is either a mistake of fact or a mistake of law. As a general principle the Court will not relieve from the consequences of a mistake if it is one of law. A man for example who, under a misapprehension of his legal rights, parts with his property for a valuable consideration, cannot have the transactions set aside on the mere ground of mistake as to those rights. But where two parties under a mistake of fact enter into an agreement, either of them is entitled to relief from his obligations under that agreement. Thus where A, entered into an agreement for a lease of a fishery from B., both parties believing that B. was the owner of the fishery, though afterwards it was discovered that A. was the owner, the Court set aside the agreement. on behalf of A., but imposed certain terms for the benefit of B. lf, however, fraud enters into a mistake of law, as where one of the parties knowing the other is making the mist,ake says nothing and takes advantage of the mistake, then the Court will relieve the party prejudiced. This is in accord ance with the principle, adopted in cases of mistake of law, that the Court will relieve from them only where there exists some equitable ground which makes it inequitable that the relief should not be granted. And, therefore, relief was not granted in a case where, there being no fiduciary relationship between the parties, and both parties having a full knowledge of all the facts, one party demanded repayment of money received by the other, on the ground that, owing to a mistake in law, both parties had believed that the person receiving the money was entitled to it. When parties whose rights are doubtful have equal knowledge of the facts and equal means of ascertaining w hat their rights really are, and they endeavour to settle their claims among themselves, the Court is disposed to support the agreements to which they may fairly conic, notwithstanding the subsequent discovery Of comnion error.

In London and River Plate Bank v. The Bank of Liverpool it was decided that money once paid and received on a bill of exchange, in good faith, but under a mistake not immediately discovered, cannot be recovered. There a bill having become due and been presented for payment, wa.s paid in good

faith and the money received in good faith, but after an interval of time, during which the position of the holder might have been altered, it was discovered that the indorsements were forged. The money so paid was not allowed to be recovered from the holder. In Cocks v. Masterman the rule upon which this decision was based is laid down very clearly. When a bill becomes due and is presented for payment the holder ought to know at once whether the bill is going to be paid or not. If the mistake is discovered at once, it may be the money can be recovered back ; but if it is not, and the money is paid in good faith, and is received in good faith, and there is an interval of time in which the position of the holder may be altered, the principle applies that money once paid cannot be recovered back. This rule is obviously indispensable for business. By a delay the holder may be too late to give notice of dishonour of the bill, and so lose recourse against prior indorsees. Sometimes, as in //cake/ v. Pape, it falls to the Court to say which of two innocent parties is to suffer for a mistake occasioned by the carelessness of a third. In that MSC the defendant wrote a message for transmission by telegraph to the plaintiffs, ordering three rifles. By mistake the telegraph clerk telegraphed the word " the" for "three"; and the plaintiffs thereupon, acting upon a previous communication with the defendant to the effect that he might perhaps want as many as fifty rifles, sent that number to him. 'rhe defendant declined to take more than three. It was held that the defendant was not responsible for the mistake of the telegraph clerk, and that therefore the plaintiffs were not entitled to recover the price of more than three rifles. A negotiable security, such as a bill of exchange, which is given, in ignorance, ni satisfaction of a liability from which the party giving the security is discharged in law, cannot be enforced against him by the party to whom it is given. And where, as in Smith v. Wheatcrqft, personal considerations enter into a contract, an error as to the person with whom the contract is made will annul the contract. But this will not be so where the person sought to be bound would have been equally willing to make the same contract with any other person.