Unilateral Mistake in Contracts

What is a unilateral mistake under the law of contract?

Unilateral mistake in contracts

A contract may also be affected by a ‘unilateral mistake’, that is when only one party is acting under a mistake (a) where the mistake relates to the identity of a contracting party, and (b) those where the mistake relates to a term of the contract (More common).

If A enters into a contract under a misapprehension as to a particular important term and the mistake is known to B, such a mistake may render the contract void at common law.

The Singapore Court of Appeal clarified in Chwee Kin Keong v Digilandmall.com Pte Ltd that this common law doctrine is confined to cases where the non-mistaken party, B, has actual knowledge of A’s mistake.

If a case does not fall within the ambit of the common law doctrine (because, for instance, it has not been established that B has actual knowledge of A’s mistake), the court may nevertheless exercise its equitable power to set the contract aside if B is guilty of unconscionable conduct.

In Chwee Kin Keong v. Digilandmall.com Pte Ltd, one of the defendant’s employees mistakenly uploaded the contents of a training template onto the defendant’s website, resulting in the retail price of S$3,854 for a commercial laser printer on the website being replaced with the figure S$66. six plaintiffs ordered 1,606 printers.

The plaintiffs sought to enforce the contracts when the defendant refused to honour the sales at the mistaken price.

V K Rajah JC in his grounds of judgement stated that constructive knowledge of the mistake was sufficient for unilateral mistake to be operative.

He held that it stood to reason that if a party shut its eyes to the obvious, the party was neither being honest nor reasonable, and ought to be affixed with knowledge.

It would be fair to say that such a person should not have any legitimate expectation that the contract in question would be either respected or sanctioned by the court.

The learned judge noted that the Plaintiffs had at all material times, knowledge of, or at the very least, a real belief that an error had been made by the defendant in the price posting.

The plaintiffs were all well-educated professionals. They were articulate, entrepreneurial, streetwise and savvy individuals. By their own admission, they made Internet searches through various search engines to ascertain the profits they could make.

Filed under: Contract Law
Benjamin Li Yong Le

About the Author - Benjamin Li Yong Le

Benjamin Li Yong Le (“Ben”), is an Advocate & Solicitor of the Supreme Court of Singapore. Ben is currently running his own boutique corporate and commercial law firm under the name and style of L’Avocat Law.

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