Contract; vitiating circumstances; mistake; effect of errors on consensus.
Facts: Wichelhaus agreed to buy some bales of cotton from Raffles. The cotton was in India and it was a condition of the agreement that the seller would put the cotton on board the ship Peerless for transport from Bombay to the buyer. After this agreement was entered into, the parties discovered that there were two ships called Peerless, both due in Bombay but at different times. When contracting, Raffles had one of these ships in mind, Wichelhaus the other. The result was mutual mistake, each party believing that the particular ship they had in mind was the only ship by that name.
Issue: Was there a binding contract between Raffles and Wichelhaus?
Decision: No binding contract existed.
Reason: Because two ships had the same name, the word Peerless was latently ambiguous and could be a reference to either ship. It could not therefore be said that, objectively judged, the parties had reached agreement on which ship was to be used. If there is no objective agreement because of mutual mistake, the contract will be void in common law. Compare Goldsbrough Mort & Co Ltd v Quinn (1910) 10 CLR 674.