MISTAKE. Where the parties have not meant the same thing; or one or both may, though meaning the same thing, have formed untrue conclusions as to the subject matter of the agreement, it is a mistake. (Anson on Contract, p. 121.) Mistake of intention, which is here being considered, is to be distinguished from mistake of expression, which the courts allow parties to explain or correct. It is also to be distinguished from failure of consider ation, where the question is not whether the party con tracted at all, but whether the terms of the contract have been fulfilled. If a party fails to put in the agree ment all the terms of the contract consented to and thereby bind the other party to fulfillment, this is not mistake. It is to be observed that the cases in which mistake invalidates contracts are exceptions to the general rule stated in a previous section (Ante, Sec. 415) that the parties are bound by their assent, ex pressed in plain terms, and uninfluenced by fraud or duress.
Anson, in his work on contracts mentions several instances of mistake as follows: (a) Mistake as to the Nature of the Transaction. This, he says, is of rare occurrence, because men us ually know what they are contracting about. The mis take arises from some misrepresentation or deceit on the part of a third party, and thus distinguishes the case from that of fraud. Where a deed was executed by an illiterate person who was told that it was a re lease of arrears of rent, it was held void [or mistake. (Thoroughgood's Case, 2 Co. Rep. 9.) So in Foster v. McKinnon, L. R. 4 C. P. 704. an indorsement of a bill of exchange was secured by the representation by the acceptor that it was a guarantee, and it was held not to be a binding endorsement, though in the hands of a subsequent bona fide endorsee for value. This rule is followed in the merican cases, the reason for the rule being that it is invalid not merely for fraud, if fraud is present, but because the mind of the signer did not accompany the signature; that is, he never intend ed to sign such a contract as he did sign. But the rule is qualified to this extent, that as a defense against a bona fide holder of negotiable paper, the defendant must show that he was not guilty of negligence in sign ing the paper. (Piffer v. Smith, 57 Ill. 527; Soper v. Peck, 5t Mich. 563; Ross v. Doland, 29 Ohio St. 473• (b) Mistake as to the Person with Whom the Con tract is Made. A party contracting with another has regard to his credit and character, and is not bound if by mistake, or without his consent, another is substi tuted for the one intended to be contracted with. Thus, in a case where ice was being supplied to a customer by a dealer, and another bought the dealer's business and kept on supplying the consumer without notifying him of the change, it was held that there was no privity of contract between the new dealer and consumer, which, with the possession and use of the property, would support an implied promise to pay for the ice. (Boston Ice Co. v. Potter, 123 Mass. 28; Boulton v. Jones, 2 H. & N. 564.) (c) Mistake as to the Subject Matter of the Con tract. In order to constitute such a mistake as to the subject matter of the contract as to avoid it, it must clearly appear that the party, without any fault of his own, made a prima facie agreement contrary to his real intention. A mere mistake as to his powers, judg ment, rights, etc., will not entitle a party to avoid a contract which he has knowingly, but indiscreetly, entered into.
Mistake as to the subject-matter of a contract, says Anson, will only avoid it in three cases: (i) Where the parties have agreed upon the subject-matter, but un known to them it has ceased to exist, the contract is void. (ii) Where there are two things of the same name or description, and the parties fail to agree in intention to the identity of the subject-matter, the contract fails. (iii) Where there is a mistake in in tention as to the nature of the thing promised, and such mistake is known to the party to whom the prom ise is made, and he does not inform the promisee, the contract is not binding.
Effects of Mistake. As has been seen in the pre vious sections, the effect of mistake is to avoid the contract. The common law remedies being the right to repudiate the agreement, and set up the mistake as a defense to any action brought to enforce it; and in case money has been paid under the contract it may be re covered because of the failure of the contract by mis take. In equity the mistake will be a good defense to a suit for specific performance, and the court will de clare the contract void.