Statoil ASA v Louis Dreyfus Energy Services LP [2008]

Court: High Court

Facts: Statoil (the seller) and Louis Dreyfus (the buyer) entered into a sale contract where Louis Dreyfus agreed to indemnify Statoil for any demurrage costs. Statoil mistakenly calculated the demurrage due, based on an incorrect discharge date, and settled with Louis Dreyfus based on this error. Upon discovering the mistake, Statoil sought to claim that the settlement agreement was either void at common law or voidable in equity due to unilateral mistake.

Issue: Was the settlement agreement void or voidable due to Statoil's unilateral mistake in the demurrage calculation?

Held: The High Court held that the settlement agreement was valid and neither void at common law nor voidable in equity.

Key Judicial Statements: Aikens J: A unilateral mistake about a fact not forming a term of the contract does not invalidate the contract, even if the other party is aware of the mistake (following Smith v Hughes [1871]). There is no broader equitable jurisdiction to grant rescission for unilateral mistake regarding facts not forming terms of the contract. The decision in The Great Peace suggests that such jurisdiction does not exist. Even if it did, it would not be applied here due to Statoil's carelessness.

💡 Leveluplaw: This case underscores that under English law, unilateral mistakes are generally not grounds for making a contract void or voidable, especially if the mistake does not affect the contract's terms and the other party is aware of it. Careful consideration and accurate calculations are crucial in contract negotiations to avoid disputes.