Smith v Hughes
Citations: (1870-71) LR 6 QB 597; [1861-73] All ER Rep 632; (1871) 19 WR 1059.
The claimant was offering oats for sale, and exhibited a sample of those oats. The defendant took the sample. The next day, he wrote to the claimant offering to buy them for 34s. a quarter. The defendant was under the mistaken belief that the oats were old, when in fact they were new oats. The price offered made sense for old oats, but was quite high for new oats. When he realised his mistake, the defendant refused to accept delivery. The claimant sued for breach of contract.
At trial, the jury held in favour of the defendant on the grounds that the defendant was labouring under a mistake and the claimant knew it. The claimant appealed.
- Was the parties contract void for mistake or voidable for misrepresentation?
The court ordered a new trial. The mere fact that the claimant knew that the defendant was mistaken was not sufficient grounds to void a contract.
However, if it appear to reasonable people from the circumstances and the parties’ behaviour that the parties were contracting for old oats, there would be a contract for the sale of old oats. If this were the case, the defendant would be entitled to reject the new oats. If not, the defendant would be in breach of contract.
The judge’s direction to the jury was therefore incorrect and the matter should be reconsidered.
This Case is Authority For…
A seller’s passive acquiescence in a buyer’s mistake is not enough for a contract to be void for mistake. Sellers are not under any legal obligation to inform buyers that they are mistaken.
What the parties intend to contract for is assessed objectively. As Blackburn J put it:
‘If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms.’
Cockburn CJ noted that the contract would plainly be voidable if the claimant had positively represented that the oats were old.