B contracted to sell plaintiff certain machines.
B’s performance guaranteed by CDN.
Machines did not exist.
Plaintiff sued defendant on guarantee.
Steyn J held guarantee subject to express (or if not,
implied) condition that machines existed.
implied) condition that machines existed.
Hence guarantee void.
But went on to consider, obiter, whether contract void
for mistake.
for mistake.
Followed Lord Atkin’s test in Bell.
Found that non-existence of subject matter of
principal contract was of fundamental importance to accessory contract (ie guarantee).
principal contract was of fundamental importance to accessory contract (ie guarantee).
Therefore test of common law mistake satisfied and guarantee
void ab initio.
void ab initio.
[Steyn also tried to draw together common law and equitable
doctrines of mistake.
doctrines of mistake.
Court decides whether there is mistake at common law.
If void, no question of equity arises.
If not void, court considers possibility of equitable
relief]
relief]
