Raffles v Wichelhaus

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The Peerless
Mumbai Gateway of India detail.jpg
Court Court of Exchequer
Decided 20 January 1864
Citation(s) [1864] EWHC Exch J19, (1864) 2 Hurl & C 906
Court membership
Judge(s) sitting Pollock CB, Martin B and Pigott B
Keywords
Mutual mistake

Raffles v Wichelhaus [1864] EWHC Exch J19, often called "The Peerless" case, is a leading case on mutual mistake in English contract law. The case established that when both parties to a contract are mistaken as to an essential element of the contract, the Court will attempt to find a reasonable interpretation from the context of the agreement before it will void it.

The case's fame is bolstered by the ironic coincidence contained within: each party had in mind a particular ship, with no knowledge of the other's existence, yet each ship was named Peerless.

Facts[edit]

The claimant entered into a contract to sell "125 bales of Surat cotton, guarantied middling fair merchant's Dhollorah" to the defendant at the rate of 17 14 d. per pound. The contract specified that the cotton would be arriving in Liverpool on the ship Peerless from Bombay ("to arrive ex Peerless from Bombay"). It so happened that there were two British ships named Peerless arriving in Liverpool from Bombay, one departing in October and another departing in December. The defendant, according to statements presented in court, thought the contract was for cotton on the October ship while the claimant thought the contract was for the cotton on the December ship. When the December Peerless arrived, the claimant tried to deliver it, however the defendant repudiated the agreement, saying that their contract was for the cotton on the October Peerless.

The claimant sued for breach of contract, arguing that the date of the ship was not relevant and the only purpose of specifying the name of the ship is that in the contingency that the ship sink en route, the contract could be voided.

The issue before the Court was whether the defendant should be bound by the agreement to buy the cotton of the claimant's Peerless.

Judgment[edit]

Though courts will strive to find a reasonable interpretation in order to preserve the agreement whenever possible, the court in Raffles could not determine which ship named Peerless was intended in the contract. Consequently, as there was no consensus ad idem (as defendant alleged), the two parties did not agree to the same thing and there was no binding contract. Therefore, the defendants prevailed, and did not have to pay.

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