HO LI QUAN

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This case is between Mr Pine and Norman Nelson regarding the contract of purchasing the Tasmanian Oak. The issue here is whether the contract would be void and Mr Pine’s legal position regarding it.

Both Mr Pine and Norman Nelson were into a contract which sets out the price and delivery date of the Tasmanian Oak where Norm left a deposit of $500 which the rest would be paid upon delivery. However, during this time neither of them knew that at the time of entering the contract, the ship carrying the timber had sunk. This is a case of Common mistake as to the existence of subject method 1 which occurs when each party to the contract makes the same mistake. In this scenario, although the parties are in agreement as to the terms of their contract, a shared mistake strikes as the efficacy of that contract. According to s 11 of the Goods act 1958(Vic) :

Where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when the contract is made, the contract is void.

In the case of Mr Pine and Norman Nelson, this satisfies the act as the Tasmanian Oak are goods and the seller, which is Mr Pine, was not aware that the goods had perished when the contract is void, and thus the contract is voided. A similar case( Scott v Coulson [1903] 2 Ch 249) happened where Scott entered a contract to assign a life insurance policy to Coulson unknown to both the assignor and assignee of the policy that the assured has already died. It was then held that the contract of assignment was void for common mistake. Under common law, the courts will not render the contract void on the ground of common mistake unless the mistake involves a matter which is so fundamental to the contract that both parties regard It as a condition precedent to the existence of the binding contract. Whether a common mistake is of that nature will depends on the facts of the case. However the decided cases suggests that to be fundamental, the common mistake must either :

- Relate to the very existence of the subject matter of the contract or- Involve the disposition of property to a person who already owns it

In this case, the common mistake relates to the contract of the Tasmanian oak where it is the subject matter of existence. The subject matter, the Tasmanian oak is also a good which means that the rule of “ Where the common mistake involves the existence of the subject matter, the contract will be void” would have a statutory force.

1 The is often referred to as a plea of ‘res extincta’ – literally. ‘the thing has perished’

In Conclusion, the contract between Mr. Pine and Norman Nelson would be void due to Common mistake at common law. Thus, Mr. Pine would have to refund Norman Nelson the $500 deposit as the contract would no longer be valid.