Facts
Albrecht Construction Ltd averaged tenders from subcontractors to put forward a bid for
the dressing room installation part of their bid for a contract to construct a new sports
arena.
INVITATION TO TENDER
Only 2 subcontractor bids: Philip and Michael
Deadline for subcontractors to submit their bids was 5pm on 31st March
Philip:
Facts:
Philip posted a bid approximately half the cost of Michael’s, which arrived on time and was
accepted- Postal Rule not applicable.
Philip’s bid was too low to be feasible for him due to an arithmetical error when drawing it
up- Mistake
Philip has informed Albrecht Construction Ltd of the error and that he will not be able to do
the job for that price- Mistake: Frustration?
Issue 1
Arithmetic errors
Not Frustration as the error occurred before the contract was made, although only coming
to light after the contract was agreed.
Common Mistake- The tender amount was wrong due to an arithmetic error.
Relevant Laws
Mistake-
Smith v Hughes [1871]- Facts must be viewed objectively by the court when deciding if the
mistake was sufficient to void the contract.
Amalgamated Investment and Property Co Ltd v John Walker and Sons Ltd [1977] 1 WLR
164- The mistake must precede the contract.
Common Mistake- Must not be the fault of one of the parties to void contract. The
arithmetical error is referred to as “his mistake”, therefore Philip assumes blame for the
mistake.
Common mistake must be the fault of neither party, and ‘fundamental’1 to the contract.
Centrovincial Estates plc v Merchant Investors Assurance Co. Ltd [1983] 3 WLUK 55- Where
an offeror makes an unambiguous offer to a third party, under a mistake which the party
ought not to be aware of, they are bound by an acceptance of the offer, as long as there is
consideration. “It is a well-established principle of the English law of contract that an offer
falls to be interpreted not subjectively by reference to what has actually passed through the
mind of the offeror, but objectively”. There is no reason for Albrecht Construction Ltd to be
aware of the error in the tender, therefore the contract will not be voided for common
1 Bell v Lever Bros Ltd [1932] AC 161.
