Unilateral Mistake:
Unilateral mistake occurs when one party is mistaken regarding a term in the
contract, the other party knows that the original party is mistaken and takes
advantage and snaps up the deal anyways. If this is proven the contract is void ab
initio (void at the outset) (Smith v Hughes). This remedial difference is a one of the
many distinctions between unilateral mistake and misrepresentation. In
misrepresentation you are able to rescind the contract but such a rescission is
subject to bars. No bars exist for voiding of a contract and since it is not an equitable
remedy the judge has no discretion. Therefore, depending on the circumstances it
may be beneficial for the claimant to pursue a misrepresentation case or a unilateral
mistake depending on the facts. In order to pursue a case in unilateral mistake the
mistake needs to be as to a term of the contract.. If the mistake can be characterized
as something other than a term (such an assumption or a representation that lies
outside of the contract) then the doctrine of unilateral mistake will not apply.
We can identify whether something is a term if the objective reasonable person
would look at it and say it is a term and it was intended to be a term and therefore is
part of the contract (Heibut, Symon & Co v Buckleton). The more important the
supposed term is to subject matter of the contract, the more likely it will be
determined to be a term. In this case:
In Smith v Hughes it was established that in order to prove that there was a
unilateral mistake the party must prove that (1) one party was mistaken to the
actual terms of the contract and (2) the other party knows subjectively that the first
party is mistaken and nevertheless snaps up the offer. It is not enough that they
should know, or ought to have known. This subjective aspect of the test is an
anomaly in contract law because we are usually dealing with objective standards,
but it does not mean that objective standards do not play an essential role in our
analysis. In Hartog it was determined that we can use objective standards to discern
the subjective knowledge of the party trying to capitalize on the error. Such
standards are market customs, the bargain itself and contradictions of previous
correspondence between the parties.
Potential analogies:
 Hartog: Price per piece v Price per pound
 Smith v Hughes: Old oats vs new oats.
In this case: