Bell v Lever Brothers

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Citation: Bell v Lever Brothers Ltd [1932] AC 161

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 768-71 [31.50]

Contents

Background facts

  • Plaintiff [Lever Brothers] employed the Defendant [Bell] in one of their companies.
  • They terminated his agreement and gave him a compensation package.
  • Afterwards, they learnt that he was in breach of his duty, thus entitling them to terminate his employment without compensation.
  • Plaintiff sought to void the agreement for mistake and recover the money.

Legal issues

Judgement

  • A mistake can mean that consent is negated, meaning the contract is void as if it never existed. The effect depends on what kind of a mistake.
    • "If mistake operates at all it operates so as to negative or in some cases to nullify consent. The parties may be mistaken in the identity of the contracting parties, or in the existence of the subject matter of the contract at the date of the contract, or in the quality of the subject matter of the contract. These mistakes may be by one party, or by both, and the legal effect may depend upon the class of mistake above mentioned."[1]
  • When there is a mistake as to the quality of the subject matter, it only negates consent in circumstance which mean that it is fundamentally or essentially different from what was contracted for.
    • "Mistake as to quality of the thing contracted for raises more difficult questions. In such a case a mistake will not affect assent unless it is the mistake of both parties and is as to the existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be."[2]
  • In this case, it isn't a fundamentally different outcome:
    on the whole I have come to the conclusion that it would be wrong to decide that an agreement to terminate a definite specified contract is void if it turns out that the agreement had already been broken and could have been terminated otherwise. The contract released is the identical contract in both cases and the party paying for release gets exactly what he bargains for. It seems immaterial that he could have got the same result in another way or that if he had known the true facts he would not have entered into the bargain."[3]
  • From a constructionalist point of view, there is no reason to imply a condition precedent. Condition precedents are only implied if they are necessary because the new state of facts makes the contract different in kind from what it was going to be.
    • "The implications to be made are to be no more than are 'necessary' for giving business efficacy to the transaction : and it appears to me that both as to existing facts or future facts a condition should not be implied unless the new state of facts makes the contract something different in kind from the contract in the original state of facts."[4]
  • For implying a condition precedent, the question is "Does the state of the new facts destroy the identity of the subject matter as it was in the original state of facts?"[5]
  • Plaintiff fails.

References

  1. [1932] AC 161, 217
  2. [1932] AC 161, 218
  3. [1932] AC 161, 223-4
  4. [1932] AC 161, 226
  5. [1932] AC 161, 227
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