• In the case of Brennan v Bolt Burdon [2005] QB 303, it was accepted in principle that a common mistake as to the law could vitiate a contract where it rendered the performance of the contract impossible.

Facts of Brennan v Bolt Burdon [2005] QB 303

  • Brennan, the C, claimed for personal injured suffered due to the leaking carbon monoxide gas from the faulty boiler provided by the landlord, Islington Council
  • Having both believed that the claim was time barred as the claim form had not been submitted within the limitation period, a settlement agreement was entered by forming a contractual compromise
  • The court’s finding was overruled, and it was held that the notice by Brennan was served soon enough and so he tried to rescind the contract of compromise

Issues in Brennan v Bolt Burdon [2005] QB 303

  • Having been told that his notice was served within the time limitation, should the C be allowed to revoke the contract of compromise due to common mistake?

Held by the Court of Appeal

  • No, the contract of compromise was seen to be valid. To be able to vitiate a contractual compromise, the common mistake of law or fact must have made performance impossible.

Lord Justice Maurice Kay

Vitiating a contract due to common mistake of law

  • “For a common mistake of fact or law to vitiate a contract of any kind, it must render the performance of the contract impossible” [17]

In the present case, Lord Justice Maurice Kay noted that performance could still be performed

  • “this is quite simply not a case of impossibility of performance. The compromise has at all times remained performable, albeit to the disadvantage of Miss Brennan. It seems to me that, in the light of the Great Peace case, that is in itself sufficient to put it beyond the reach of common mistake of law. Secondly, although Mr Bartle submits that it was for Islington to bargain for a term whereby the compromise would survive subsequent legal change … I do not accept that that is the correct approach to the construction of compromises. Their essence is finality.” [22]

Therefore, the contract would not be void as it was a mistake of the C’s solicitor, and the contract was performable:

  • “the evidence does not establish a true mistake of law at all, more a state of doubt; that Miss Brennan’s solicitor was at fault in not inquiring about any appeal in Anderton’s case; that the compromise was a matter of give-and-take which ought not lightly to be set aside; that it is not impossible to perform; and that, as a matter of construction, the risk of a future judicial decision affecting matters to Miss Brennan’s advantage was impliedly accepted and bargained away by her solicitor.” [23]

Lord Justice Sedley

Having considered the dangers of voiding a contract on mistake of law, only with reluctance did Lord Justice Sedley allow the appeal.

  • “The possibility that extant litigation will be compromised on the basis of a mistake as to the current state of the law which is both mutual and non-negligent is not great. The typical case is going to be—as here—a shift in the understanding of the law subsequent to the compromise. It is not because mistakes of law have been added to mistakes of fact as grounds for undoing an agreement that this is now problematical. It is because the process is now required, by the majority decision of their Lordships’ House, to incorporate the fiction that the law always was as it now (or at least for the time being) is.” [63]
  • “But, like Maurice Kay LJ and Bodey J, I see no choice in the present case. The law must be taken to have been what it was only later declared to be, but the putative mistake created by this shift cannot be allowed to undo a compromise of litigation entered into in the knowledge both of how the law now stood and of the fact—for it is always a fact—that it might not remain so.” [64]