Raffles v Wichelhaus [1864]

Raffles v Wichelhaus [1864] EWHC Exch J19, commonly referred to as The Peerless case, is a significant precedent on mutual mistake in English contract law. The case is particularly renowned for the ironic coincidence that both parties had different ships named Peerless in mind, without knowledge of each other's choice.

The facts of the case involved Raffles, the cotton supplier, and Wichelhaus, the cotton purchaser. The contract was for the sale of 125 bales of Surat cotton, to arrive on the ship Peerless from Bombay. However, there were two British ships named Peerless arriving in Liverpool, one in October and the other in December. The crucial issue was that the parties had conflicting understandings of which ship named Peerless was intended in the contract.

Despite Raffles arguing that the ship's date was irrelevant and the only purpose of specifying the ship was to void the contract in case of a shipwreck, the court held that there was a latent ambiguity in the essential element of the contract. The court, in its judgment, highlighted the principle that, in cases of mutual mistake, the parties must have a consensus ad idem, a meeting of the minds, for a contract to be binding. As the court could not determine which ship named Peerless was intended in the contract, there was no mutual agreement, and the contract was deemed voidable.

The judgment emphasised the court's willingness to find a reasonable interpretation to preserve an agreement whenever possible. However, in this case, the lack of a clear consensus ad idem resulted in a mutual mistake, rendering the contract unenforceable. The judgment is illustrative of the legal principle that courts will attempt to void a contract when a latent ambiguity exists concerning an essential contractual element.
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