George Wimpey UK Ltd v VI Construction Ltd
Court of Appeal
Citations:  EWCA Civ 77;  BLR 135; (2005) 102(9) LSG 28; (2005) 149 SJLB 182;  2 P & CR DG5;  CLY 717.
VI Construction sold a site to George Wimpey for development. The contractual price was based on a complicated formula which was the result of considerable negotiation. When VI drew up the final version of the agreed formula for inclusion of the contract, they made an error which put George Wimpey at a disadvantage. That error was a failure to include part of the formula. George Wimpey brought proceedings for unilateral mistake and rectification of the contract.
- Was George Wimpey entitled to the defence of mistake?
- Was George Wimpey entitled to rectification of the contract?
The Court of Appeal held in favour of VI. The parties were entitled to assume that the other knew what they were agreeing to. VI had no actual knowledge that George Wimpey erroneously thought that the complete formula was represented in the contract. As such, George Wimpey was not entitled to rectification for unilateral mistake.
This Case is Authority For…
To acquire rectification for unilateral mistake, the party must show ‘a mistake on the claimant’s own part which the defendant was honour-bound, despite his own legitimate business interests, to point out to him’.
The claimant must also show that the defendant had actual knowledge of their mistake. This includes cases where the defendant wilfully closed their eyes to the obvious ‘or had wilfully or recklessly omitted to do what an honest and reasonable person would have done’.
The court noted that:
‘There are at least two kinds of mistake. One is a literal misunderstanding of some fact material to the proposed contract. The other is an error of judgment in entering into the contract. I find it difficult to think that the second kind has any relevance to the law of unilateral mistake. Nobody is bound, even in honour, to help his opposite number to negotiate to the best advantage.’