Appreciating and reforming the remedy of equitable rescission for genuine mistake in contract law

Abstract

It is not unusual that one or all parties commit a genuine mistake when making contracts. While there is the strict general duty under the law to respect agreements, there equally exists the duty for courts and tribunals to be fair and to render commercial justice in the factual matrix of cases before them. In national legal systems and transnational law regimes, rescission for mistake on economically efficient and just terms is embedded in contractual obligations. The Solle v Butcher (1950) doctrine, which represented the English law approach, was rejected in The Great Peace (2002). Potential conflicts and crises now exist in commercial relations and international dispute resolution when ‘English law’ is the applicable law. This extends to jurisdictions where English decisions are highly persuasive. This article examines the correctness and effect of The Great Peace decision on the doctrine of equitable rescission for genuine mistake as propounded in Solle v Butcher, and possible clarifications needed after the complications brought by The Great Peace. It analyses the conceptual importance of the remedy of equitable rescission for mistake in commercial transactions, and identifies serious substantive errors of law by The Great Peace court. Finally, it provides other effective, fair and efficient legal methods that remain available to avoid the weaknesses of the decisions.