Raffles v. Wichelhaus
Rule established
Where a key term of the contract is ambiguous and the parties attach different meanings to it (mutual/bilateral mistake), there is no consensus ad idem and the contract is void.
Facts
- Raffles agreed to sell 125 bales of Surat cotton to Wichelhaus
- The contract specified delivery "ex Peerless from Bombay"
- There were in fact two ships named "Peerless" sailing from Bombay; one departing in October and another in December
- Wichelhaus meant the October Peerless; Raffles meant the December Peerless
- When Raffles tendered cotton from the December ship, Wichelhaus refused to accept delivery
- Raffles sued for breach of contract
Issue
- Whether a binding contract existed where the parties used the same term ("Peerless") but intended different things, and neither party was aware of the ambiguity?
Held
- The court held for the defendant (Wichelhaus); no contract existed
- The term "Peerless" was latently ambiguous; capable of two meanings, each equally reasonable
- There was no consensus ad idem; the parties never agreed on the same ship
- Since neither meaning was objectively more correct, the court could not choose one interpretation over the other
- The contract was void for mutual mistake
Ratio Decidendi
Where a key term of a contract is ambiguous and the parties each reasonably attach a different meaning to it without knowing of the ambiguity, there is no consensus ad idem (meeting of minds). Neither party is at fault; the objective test of agreement cannot resolve the ambiguity because both interpretations are equally reasonable. The contract fails for mutual mistake.
How to use it in an exam
- Part A: The classic authority on mutual (bilateral) mistake; both parties mistaken about the same fundamental term.
- Part B: Distinguish from unilateral mistake (Cundy v Lindsay: only one party mistaken, other party is fraudulent).
- Indian application: Section 20 ICA: "Where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void."
- Problem questions: Involving ambiguous descriptions, two items with the same name, or parties at cross-purposes.
Source
Source: (1864) 2 H&C 906; 159 ER 375
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.