Mutual mistakeAmbiguityCourt of Exchequer (England)

Raffles v Wichelhaus

(1864) 2 H&C 906; 159 English Reports 37518642 min read
The case in brief30-second read
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.
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.
Principle
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.
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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

  1. 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.

Exam use

How to use it in an answer

  • 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.

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Citation

Raffles v. Wichelhaus (1864) 2 H&C 906; 159 English Reports 375

Reported: (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.