Teather v Kawashima 2016 BCSC 2231 involved litigation where the defence of mistake was argued and the Court reviewed the law.
When parties are negotiating a contract it may occur that one party is thinking of one thing while the other party is thinking of another. This will result in a mistake and when that occurs, one of the parties may attempt to vitiate the contract.
I have seen this occur when negotiating a settlement at a mediation- the parties were mistaken as to the terms of what was intended to be contained in the settlement, and one party sued to vitiate the settlement. There are three types of mistake in law, common, mutual and unilateral
THE LAW OF MISTAKE
As to the distinction between the types of mistake giving rise to vitiation of the underlying contract, in whole or in part, Prowse, J.A. adopted the following summary from Ron Ghitter Property Consultants Ltd. v. Beaver Lumber Co. (2003), 17 Alta. L.R. (4th) 243 (C.A.) at paras. 12 — 13:
12. There are three types of mistake: common, mutual and unilateral: see Cheshire, Fifoot & Furmston, Law of Contract, [14th ed. (London: Butterworths, 2001)], supra, at 252-53 for a summary of each.
Common mistake occurs when the parties make the same mistake. For example, one party contracts to sell a vase to another when unbeknown to both, the vase was destroyed and no longer exists.
Mutual mistake occurs when both parties are mistaken, but their mistakes are different. In this event, the parties misunderstand each other and are, to use the vernacular, “not on the same page”.
Unilateral mistake involves only one of the parties operating under a mistake. If the other party is not aware of the one party’s erroneous belief, then the case is one of mutual mistake but if the other party knows of it, of unilateral mistake. What adds to the confusion is that the distinction between mutual and common mistake is sometimes blurred when courts use the two terms interchangeably.
13. The presence or absence of an agreement is one of the foundational differences amongst the three types of mistake. With common mistake, the agreement is acknowledged. What remains to be determined is whether the mistake was so fundamental as to render the agreement void or unenforceable on some basis.
But in the case of a mutual or unilateral mistake, the existence of an agreement is rejected. As explained in Cheshire, Fifoot & Furmston, supra at 253:
Where common mistake is pleaded, the presence of agreement is admitted. The rules of offer and acceptance are satisfied and the parties are of one mind. What is urged is that, owing to a common error as to some fundamental fact, the agreement is robbed of all efficacy. Where either mutual or unilateral mistake is pleaded, the very existence of the agreement is denied. The argument is that, despite appearances, there is no real correspondence of offer and acceptance and that therefore the transaction must necessarily be void.