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A New Approach to Mutual Misunderstanding Under The Anglo-American Contract Law

  • DONG-A LAW REVIEW
  • 2012, (57), pp.145-172
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law

Jong Geun Lee 1

1동아대학교

Accredited

ABSTRACT

It is a prevalent view that a contract involving mutual misunderstanding is void ab initio, because there is no subject matter agreed between the contractual parties. In the Anglo-American common law it is a doctrinal principle that agreements based on a mutual misunderstanding can not be enforced. Perhaps the case of Raffles v. Wichelhaus decided in 1864 in England is one of the most important cases regarding mutual misunderstanding. The decision in Raffles v. Wichelhaus has been followed as a precedent consistently in England. And in Canada, the decision itself has not been followed frequently, but its result has been taken generally. Most of all, it is in the U.S. that we can find the most developed shape of case law regarding mutual misunderstanding in the process of contract formation. Anyway, if any contractual obligations between the parties can not be enforced on the grounds that there are no legally enforceable agreements, then in numerous instances, one of the parties will see unexpected benefits and the other party will experience unexpected losses for relying on the apparent contract. Consequently, an alternative legal principle needs proposing to improve upon the efficacy of the results in most cases involving mutual misunderstanding. One of the alternatives is that each party involved in the agreements based on mutual misunderstanding should be given the right to conventional contract remedies, vis-à-vis the other party, as if there were two sets of rights and obligations between the parties. Thus, in conclusion, the new proposal is that the reasonable expectations of the parties to the agreements based on mutual misunderstanding would be given remedies by allowing each party to enforce the contracts to the other party.

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