Great Peace Shipping Ltd v Tsavliris (International) Ltd [2002]

Great Peace Shipping Ltd v Tsavliris (International) Ltd [2002] EWCA Civ 1407, known as The Great Peace, is a significant case in English contract law that delves into the circumstances under which a common mistake within a contractual agreement will render it void. The case notably disapproves of Solle v Butcher [1950], a Court of Appeal decision that established a doctrine of equitable mistake, favouring a different approach.

The defendants, Tsavliris, were professional salvors engaged in maritime salvage operations. They entered into a salvage agreement concerning a vessel named Cape Providence. Tsavliris, using the Ocean Routes service, sought to locate the nearest rescue vessel and identified one called the Great Peace. However, a mistake was made regarding the Great Peace's location, which was later revealed to be 410 miles away instead of the initially thought 35 miles. Tsavliris terminated the contract with Great Peace Ltd, leading to a legal dispute over a claim of gross breach of contract by the latter.

Lord Phillips of Worth Matravers MR, delivering the judgment, held that the mistake was not fundamental enough to void the contract. Despite the substantial distance discrepancy, the delay in reaching the location was deemed insufficient to render the performance of the contract "essentially different" from what the parties had envisaged when entering the contract.

The judgment also disapproved of Solle v Butcher [1950] and outlined the necessary elements for a common mistake to void a contract. These elements included a common assumption about a state of affairs, the absence of a warranty regarding that assumption, the non-existence of the state of affairs not being attributable to either party's fault, and the non-existence rendering performance impossible. The court emphasised the importance of construction in determining whether unforeseen circumstances genuinely made the contract impossible to perform.

In conclusion, The Great Peace sets out a nuanced approach to assessing common mistakes in contracts, emphasising the need for the mistake to be sufficiently fundamental to impact the essence of the contractual obligations envisioned by the parties.
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