''Raffles v Wichelhaus'' [1864
EWHC Exch J19 often called "The ''Peerless''" case, is a leading case on
mutual mistake in English contract law. The case established that where there is latent ambiguity as to an essential element of the contract, the Court will attempt to find a reasonable interpretation from the context of the agreement before it will void it.
The case's fame is bolstered by the ironic coincidence contained within: each party had in mind a particular ship, with no knowledge of the other's existence, yet each ship was named ''Peerless''.
Facts
*Raffles is the cotton supplier.
*Wichelhaus is the cotton purchaser.
*There is a steep drop in prices between October and December.
*Wichelhaus does not want the December cotton delivery because of the drop in cotton prices.
The
claimant (Raffles) entered into a contract to sell 125 bales of
Surat cotton
Cotton (), first recorded in ancient India, is a soft, fluffy staple fiber that grows in a boll, or protective case, around the seeds of the cotton plants of the genus '' Gossypium'' in the mallow family Malvaceae. The fiber is almost pure ...
at fair market price to the defendant (Wichelhaus) at the rate of
d. per pound. The contract specified that the cotton would be arriving in
Liverpool
Liverpool is a port City status in the United Kingdom, city and metropolitan borough in Merseyside, England. It is situated on the eastern side of the River Mersey, Mersey Estuary, near the Irish Sea, north-west of London. With a population ...
on the ship ''Peerless'' from
Bombay
Mumbai ( ; ), also known as Bombay ( ; its official name until 1995), is the capital city of the Indian States and union territories of India, state of Maharashtra. Mumbai is the financial centre, financial capital and the list of cities i ...
("to arrive ex Peerless from Bombay").
It so happened that there were two
British ships named ''Peerless'' arriving in Liverpool from Bombay, one departing in ''October'' and another departing in ''December''. The defendant, according to statements presented in court, thought the contract was for cotton on the October ship while the claimant thought the contract was for the cotton on the December ship. When the December ''Peerless'' arrived, the claimant (Raffles) tried to deliver it, however the defendant repudiated the agreement, saying that their contract was for the cotton on the October ''Peerless''.
The claimant sued for breach of contract, arguing that the date of the ship was not relevant and the only purpose of specifying the name of the ship is that in the contingency that the ship sink en route, the contract could be voided.
The issue before the Court was whether the defendant should be bound by the agreement to buy the cotton of the claimant's ''Peerless''.
Judgment
Though courts will strive to find a reasonable interpretation in order to preserve the agreement whenever possible, the court in ''Raffles'' could not determine which ship named ''Peerless'' was intended in the contract. Consequently, as there was no ''
consensus ad idem'' ("meeting of the minds"), the two parties did not agree to the same thing and there was no binding contract. This is a classic example of
mutual mistake, wherein both parties misunderstood the contract. Therefore, the defendants prevailed, and did not have to pay.
Text of the judgment
Note that the process of
demurrer is a
common law
Common law (also known as judicial precedent, judge-made law, or case law) is the body of law primarily developed through judicial decisions rather than statutes. Although common law may incorporate certain statutes, it is largely based on prece ...
practice that seeks to dismiss a lawsuit on the grounds that the facts are true, and are not enough to warrant legal action. In this case, the defendant demurred, seeking dismissal.
The Court agreed. The paragraphs with names at the front (Milward, Mellish) are that of the lawyers arguing for the respective parties, and present the arguments of the parties, interspersed with questions from Judge Pollock from the three Judge panel.
See also
*
Mistakes in English law
*
Interpreting contracts in English law
References
External links
Clarification of the report of ''Raffles v. Wichelhaus''
{{DEFAULTSORT:Raffles V Wichelhaus
English contract case law
1864 in case law
1864 in British law
Court of Exchequer Chamber cases