Couturier v Hastie (1856) 5 HL Cas 673
Facts
A cargo of corn was shipped for sale in England. Before the sale agreement was concluded, the cargo had deteriorated and the ship's master disposed of it during the voyage. Neither side knew this when the transaction was arranged. The sellers sought the price, arguing that the buyer had acquired the relevant interest and associated insurance benefit. The buyer maintained that the agreement contemplated an existing cargo. The litigation reached the House of Lords on whether payment remained due for goods which were no longer available as the contemplated subject of the sale.
Legal Issue
Did the sale oblige the buyer to pay when the cargo had already been disposed of, or did the contract presuppose an existing subject matter?
Held
The House of Lords held that the buyers were not obliged to pay the price for the supposed cargo. On the proper interpretation of the transaction, the parties contemplated existing goods capable of being sold. The corn had already been disposed of before they contracted, so that basis was absent.
The insurance-related wording did not mean that the buyer had agreed to purchase merely a chance of recovery or assume every risk concerning a cargo already gone. The decision is often explained as common mistake, but its reasoning stresses construction and the existence assumed by the particular contract. It therefore does not establish that any error about goods automatically avoids a sale regardless of what a party warranted or agreed to bear.
⭐ Legal Principle
Where a contract for specific goods presupposes that the goods still exist as the subject of sale, their prior disappearance may prevent the buyer's payment obligation arising. Construction and risk allocation come first. The doctrine of common mistake does not override an undertaking that allocates the relevant risk.
Significance
Couturier is commonly taught as a non-existence case in common mistake, but also demonstrates the importance of construing the transaction. Compare McRae, where the seller's undertaking prevented reliance on non-existence as an escape from responsibility. In modern sale-of-goods questions, section 6 of the Sale of Goods Act 1979 may also be relevant to specific goods that have perished without the seller's knowledge. Do not omit the statutory conditions or treat every deterioration in quality as disappearance of the subject matter.
Common exam questions about this case
Why did the buyer not have to pay for the corn?
The agreement contemplated a cargo still available as the subject of sale. It had already been disposed of before the contract was made. The court did not construe the transaction as a purchase of insurance rights alone or a wager on whether the cargo remained in existence.
Why does risk allocation matter before common mistake?
A party may promise that the subject matter exists or agree to bear the risk that it does not. The contract must therefore be interpreted before applying a default mistake analysis. Couturier and McRae illustrate different outcomes because the undertaking and risk allocation in the particular transaction matter.
How is this different from the cargo deteriorating after a valid sale?
Couturier concerned the position before the agreement was made. Subsequent loss raises different questions about passing of risk, contractual terms and statutory rules. An exam answer should establish the timing of the disappearance and identify the agreed allocation rather than assuming every loss of goods produces the same legal result.