Contract; vitiating circumstances; mistake; rules of common law and equity.
Facts: Butcher agreed to lease an apartment to Solle at a yearly rental of £250 . Both parties believed that the rental for the flat was not restricted by the Rent Restriction Act, under which the maximum rental was £140 per year. In fact the Act applied. When he discovered this, Solle wanted to recover the amount he had overpaid.
Issue: Was the lease void or voidable because both parties wrongly believed that the Rent Restriction Act did not apply to the rented property?
Decision: The lease was not void in common law, but could be set aside in equity.
Reason: Even if a contract is not made void in common law, it may be voidable in equity if the mistake was fundamental and provided the party seeking to set the contract aside was not at fault (i.e. responsible for the error).
Note: This case has now been disapproved. In Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] QB 679, the Court of Appeal held that Solle's case was not based on any valid principle of law and should no longer be followed.