Centrovincial Estates v Merchant Investors Assurance Co
Court of Appeal
Citations: [1983] Com LR 158.
Facts
The claimants were the leaseholders of an office block. They let several floors in the block to a third party, who underlet the 12th floor to the defendant. The third party later surrendered their lease to the claimants, who became the defendant’s direct lessor. The claimants wrote to the defendant, offering a renewed rent of £65k a year. This was £3k less than the defendants paid the third party, so they accepted.
It later transpired that the letter was mistaken. The claimants had intended to propose a renewed rent of £126k a year. When the claimants sought to correct this, the defendant asserted that the parties had a binding contract for £65k. The claimant sought summary judgment on the grounds that this contract was void for mistake.
Issue(s)
- Was the contract void for mistake?
Decision
The Court of Appeal held in favour of the defendant. The existence of a mistake was to be judged objectively. The claimant had not shown that the defendant had no prospect of establishing at trial that the claimant’s mistake was purely subjective. As such, the claimant was not entitled to summary judgment. The matter would be allowed to proceed to trial.
This Case is Authority For…
The defence of mistake looks only at errors which are objectively apparent. The fact that the parties are subjectively mistaken does not prevent the formation of a contract, assuming the other party is not aware of the mistake has no reason to be aware.
Other
The court noted that the law is not generally concerned with the adequacy of consideration. However, both parties must have provided something of value in the eyes of the law.
