Brennan v Bolt Burdon [2005] QB 303

Key point

  • Common mistakes of law can render the contract void if it makes performance impossible

Facts

  • Brennan claimed for personal injuries caused by leaking CO from faulty boiler against the landlord, Islington Council
  • Both parties believed that the claim was time barred as the claim form was not submitted within the limitation period and entered into a contract of compromise prior
  • Subsequently, it was ruled by the courts that a claim form submitted on Saturday is not deferred to Monday (the Anderton case)

Issue

  • Was the contract of compromise void for common mistake?

Held (Court of Appeal)

  • The contract of compromise was valid

Maurice Kay LJ

On common mistake: [17]

  • Contracts may be vitiated by a common mistake of law
  • For a common mistake in either law or fact to vitiate a contract, it must render performance impossible

Current case: [22]

  • The compromise was not impossible and was at all times performable
  • Furthermore, the parties were at a state of doubt as to the law but doubt does not amount to mistake
  • The correct construction a contract for compromises, is that it is for the person seeking to reserve right to sue pending a subsequent decision to seek that term, such a requirement is consistent with the policy of encouraging settlements and respecting their finality

Sedley LJ

Common mistake of law

  • The test for mistake as to existence of goods is that it must render performance impossible as stated in Great Peace
  • However, in case of mistake of law, such as test would only be satisfied if mistake was on the legality of the contract
  • In a contract of compromise, it is difficult to see how it would be impossible
  • Thus, mistake of law requires a different test: had the parties appreciated that the law as it is now known, there would still have been an intelligible basis for their agreement?: [60]

Current case

  • The contract is not void for common mistake since the it was entered into with knowledge of the how the law then stood and that it might not remain so: [64]

Commentary

  • Sedley LJ’s approach to common mistake of law is a dissent from the majority approach
  • There was a ‘mistake’ as due to the legal fiction that the law is as it has always been and that the courts are merely discovering and not developing the law