Raffles v. Wichelhaus

Raffles v. Wichelhaus [1864] 2 Hurl. & C. 906 Court of Exchequer – often called the Peerless case – is a leading case on mutual mistake in the law of contracts. The case established that when both parties of a contract are mistaken as to an essential element of the contract, the Court will attempt to find a reasonable interpretation from the context of the agreement before it will void it.

Background

The plaintiff entered into a contract to sell 125 bails of cotton to the defendent. The contract specified that the cotton would be arriving in Liverpool on the ship "Peerless" from Bombay ("to arrive ex Peerless from Bombay"). It so happened that there were two ships named "Peerless" arriving from Bombay, one arriving in October and another arriving in December. The defendant thought that he was contracting for cotton on the October ship while the plaintiff thought he was contracting for the cotton on the December ship. When the December "Peerless" arrived, the plaintiff tried to deliver it, however the defendant repudiated the agreement, saying that their contract was for the cotton on the October "Peerless".

The plaintiff sued for breach of contract, arguing that the date of the ship was not relevant and the only purpose of naming the ship is in the case that if the ship sunk enroute, the contract could be voided.

The issue before the Court was whether the defendant should be bound by the agreement to buy the cotton of the "Peerless".

Ruling

Though the Court will strive to find a reasonable interpretation in order to preserve the agreement whenever possible, the court could not determine which "Peerless" was intended in the contract. Consequently, there was no consensus ad idem, the two parties did not agree to the same thing as so there was no contract.