Petelin v Cullen

From Uni Study Guides
Jump to: navigation, search

Citation: Petelin v Cullen (1975) 132 CLR 355

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 800-2 [31.190] or here

Contents

Background facts

  • The Plaintiff [Cullen] sought to buy land off the Defendant [Petelin], an Italian immigrant who spoke very little English.
  • Through his agent, Mr. Clements, the Plaintiff purchased an option from the Defendant, exercisable in 6 months, with consideration of $50.
  • After the expiration of the option period, the Plaintiff sent the Defendant a letter with another $50 to buy an option for the next 6 months.
  • Mr Clements saw the Defendant in person and asked him if he received the letter and the money, and sign a document specifying he agrees to sell another option.
  • The Defendant signed the document under the belief that under the original agreement, he was to receive as consideration $50 in two instalments.
  • The Plaintiff sought to exercise his new option, but the Defendant refused.

Argument

  • The Defendant argues non est factum - he was mistaken as to the nature of the document he signed.

Legal issues

Judgement

  • The problem with mistakenly signed documents is that there are two opposite considerations to balance: "first, the injustice of holding a person to a bargain to which he has not brought a consenting mind; and, secondly, the necessity of holding a person who signs a document to that document, more particularly so as to protect innocent persons who rely on that signature when there is no reason to doubt its validity."[1]
  • "The class of persons who can avail themselves of the defence is limited. It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; it is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document."[2]
  • "To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part."[3]
  • "Finally, it is accepted that there is a heavy onus on a defendant who seeks to establish the defence."[4]
  • However, this heavy onus is only applied when the other party (not the mistaken one) is innocent, or innocent third parties are involved. If the other party is not totally innocent (for example, aware or has reason to suspect that the mistaken party is signing the document mistakenly), then the court will protect the mistaken party. This is because there is now no innocent parties to protect.
    • "The insistence that such precautions should be taken as a condition of making out the defence is of fundamental importance when the defence is asserted against an innocent person, whether a third party to the transaction or not, who relies on the document and the signature which it bears and who is unaware of the circumstances in which it came to be executed."[5]
    • "It is otherwise when the defence is asserted against the other party to the transaction who is aware of the circumstances in which it came to be executed and who knows (because the document was signed on his representation) or has reason to suspect that it was executed under some misapprehension as to its character. In such a case the law must give effect to the policy which requires that a person should not be held to a bargain to which he has not brought a consenting mind for there is no conflicting or countervailing consideration to be accommodated - no innocent person has placed reliance on the signature without reason to doubt its validity." [6]
  • Therefore, the element of carelessness has no relevance in this case.
  • The court were satisfied with the Trial Judge's finding that the Defendant thought he was signing a receipt. Therefore, he believed the document to be fundamentally different.
  • The court was also influenced by the poor English skills of the Defendant, and the Plaintiff's knowledge of this.
  • The Plaintiff fails, the contract is set aside.

References

  1. (1975) 132 CLR 355, 359
  2. (1975) 132 CLR 355, 359-60
  3. (1975) 132 CLR 355, 360
  4. (1975) 132 CLR 355, 360
  5. (1975) 132 CLR 355, 360
  6. (1975) 132 CLR 355, 360
Personal tools
Namespaces

Variants
Actions
Navigation
Toolbox