Bell v Lever Bros [1932]

This case became leading authority on mutual mistake.
L entered into employment contracts with B and S to
appoint them to board of Niger Comp.
Contract had certain compensation provisions for
redundancy etc.
B and S speculatively transacted in cocoa.
Would have given L right to dismiss them without
compensation.
B and S later made redundant and paid compensation.
L discovered breaches – sought rescission of contract and
repayment.
House of Lords held contract valid and binding.
Test expressed by majority:
Mutual mistake must relate to something which both parties
regard as an essential element of subject matter ie ‘fundamental mistake’.
[This test expressed by Lords Atkin and Thankerton.
Lord Blanesburgh held plaintiffs could not recover because
they had not pleaded mutual mistake, but expressed ‘entire accord’ with Lords A
and T.]
Lord Atkin:
To avoid contract on this ground, mutual mistake must
be regarding some quality without which thing is essentially different from what it was believed to be.
ie Mistake as to substance / essence avoids contract,
mistake as to quality does not.