Couturier v Hastie
Court of Common Pleas
Citations: (1856) V House of Lords Cases (Clark’s) 673; 10 ER 1065.
The seller had a cargo of corn shipped from Greece for delivery to London. He then hired an agent. The agent agreed to sell that corn to a buyer, under a FOB contract. However, none of the parties were aware that just before they entered into the contract, the ship had overheated on the journey. The corn was damaged, so the ship berthed at a port in Tunis and sold it to a third-party. When the buyer discovered this, he repudiated the contract.
The seller sued the agent for the purchase price of the corn. The agent argued that he was not liable because he had never entered into a valid contract with the buyer. This was because the subject matter of the agreement between the agent and the buyer did not exist at the time of contracting.
- Did the agent enter into a valid contract with the buyer?
The Court held in favour of the agent. The agreement between the agent and the buyer presumed that there was a cargo on board the relevant ship which still existed. Since the cargo had ceased to exist prior to the agreement, there was no valid contract.
This Case is Authority For…
A contract is void for common mistake if the subject matter of the contract ceases to exist before an agreement was reached.
If the subject matter of a contract for the sale of specific goods has expired after the contract is formed, and neither party is at fault, the contract is frustrated instead. The principle in this case only applies to goods which never existed or ceased to exist prior to the contract.