Bell v Laver Brothers [1932]

Written By Nicolas Heyes

Court: Court of Appeal

Basic Facts: L (Laver Brothers), who owned a 99% stake in Company N, was unaware of illegal market speculation by B and X. When Company N was amalgamated, B and X were dismissed with compensation. The illegal activities could have justified termination of their contract without compensation.

Issue for the Court: When can a common mistake void a contract?

Held - Lord Atkin: The court held that a common mistake must be fundamental to the contract’s existence to justify voiding it.

  • Lord Atkin stated that a mistake must negate consent to void a contract. This includes mistakes about identity, subject matter existence, or if the subject matter has perished. A mistake about quality does not void a contract unless it fundamentally alters the contract’s nature.

💡Leveluplaw : This case clarified the scope of common mistake and its impact on contract validity, emphasizing that mistakes must be fundamental to void a contract.

Nicolas Heyes
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Barton v Armstrong [1976]