Date: Thu, 5 Aug 2004 16:33:54 +0100

From: Andrew Tettenborn

Subject: Contracts, mistake of law

Once the mistake of law bar went as regards restitutionary claims, it was clearly doomed as a bar to relief for mistake in contract. Brennan v Bolt Burdon [2004] EWCA (Civ) 1017 (UK CA a few days ago) makes this obvious point: it also shows that any practical effect of this change is likely to be pretty minuscule.

B has a congeries of claims against IBC, her ex-landlord (for poisoning her with CO) and also against her lawyers (for cock-ups relating to the first claim). She serves all three with proceedings on a Mon following the end of the service period (which fell on a weekend). The lawyers successfully argue they've been served out of time - following the then much-criticised authority - & get the proceedings thrown out. IBC then agree with B that since they're off the hook as much as the lawyers, B drops her claim against them in exchange for IBC abandoning any costs claim against her.

Later the CA in another case decides that the service period in such a case ends on a Mon, and after that B's appeal against the lawyers' strikeout is allowed by consent. But can B also undo the agreement with IBC?

Morland J says Yes, since B & IBC agreed on the abandonment on the (legally erroneous) basis that IBC had been served too late, whereas in fact they'd been served in time.

The CA reverse, on these bases: (1) No mistake of law where, as here, everyone knows that the decisions supposedly embodying it are under appeal & may be reversed; (2) compromises are meant to compromise - i.e. get the claimant off the deft's back once & for all; (3) (Kay LJ & Bodey J) the mistake doesn't mirror impossibility or frustration under the Great Peace rule; and (4) (possibly) it's B's lawyers' fault for not being on the ball as regards possible changes that might be wrought by the CA.

The point, of course, is that this effectively seems to rule out mistake of law except on the lawfulness / vires of the contract itself, since any other contract *can* be performed whatever the law is. Sedley makes this point, but at [60] suggests compromises may be different: there, he suggests we ask "whether, had the parties appreciated that the law was what it is now known to be, there would still have been an intelligible basis for their agreement." But I'm not sure this adds anything. Someone might be able to fathom what might be meant by a compromise without an intelligible basis, but I'm not sure I can. The fact that the claim was demonstrably bad might seem to qualify. But that seems to be precluded by Bell v Lever Bros: if you agree to pay for something you should have had for nothing - release of the claim here - you're still stuck with your bargain.

Andrew

Andrew Tettenborn
Bracton Professor of Law, University of Exeter, England

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