Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407; [2003] QB 679
Facts
A salvage company needed a vessel to assist with the evacuation of a distressed ship's crew. It hired Great Peace believing that it was relatively close to the casualty. Both sides relied on information which proved wrong: the vessel was much further away. The salvage company initially retained its request for assistance despite learning the true distance, then cancelled after finding a closer alternative. Great Peace claimed the contractual cancellation payment. The dispute concerned whether the shared error made the agreement void or permitted rescission in equity.
Legal Issue
Did the shared mistake about the assisting vessel's distance invalidate the hire agreement or permit separate equitable rescission despite the promised performance remaining possible?
Held
The Court of Appeal held that the mistake did not make the contract void. Although Great Peace was much further from the distressed ship than both sides believed, it could still provide the contracted service. The salvage company continued to want its assistance after learning the true distance until another vessel was secured. That conduct supported the conclusion that the error had not made performance essentially impossible in the relevant sense.
The court also rejected the separate equitable jurisdiction associated with Solle v Butcher to rescind an otherwise valid contract for common mistake. The cancellation obligation therefore remained enforceable. Construction and assumption of risk had to precede the mistake inquiry; the doctrine was not an alternative way to escape a bargain that had become inconvenient.
⭐ Legal Principle
Common mistake does not avoid a contract merely because a shared assumption proves wrong. The error must satisfy the stringent requirements concerning the possibility and essential nature of performance, and the contract must not allocate the risk. English law does not recognise Solle's separate equitable common-mistake rescission jurisdiction.
Significance
Great Peace is essential when explaining the present status of Solle and the restrictive approach rooted in Bell. It separates a disappointing factual discovery from an error undermining the contractual undertaking itself. The actual behaviour after discovery was informative: the service remained useful until an alternative appeared. Students should also distinguish common mistake existing at formation from frustration caused by a later event, and identify any representation or warranty that independently allocates responsibility for the mistaken assumption.
Common exam questions about this case
Why did the vessel’s greater distance not avoid the contract?
The vessel could still perform the relevant service, and the salvage company continued to seek its assistance until a better alternative was found. The incorrect distance made the arrangement less attractive but did not satisfy the stringent threshold for common mistake. Mere commercial disappointment was insufficient.
What happened to Solle v Butcher’s equitable jurisdiction?
The Court of Appeal rejected a separate power to rescind for common mistake where the contract remains valid at common law. Other grounds of relief, such as misrepresentation or a contractual allocation of responsibility, remain distinct. Great Peace therefore prevents equity being used simply to bypass Bell's demanding threshold.
Why consider the contract before applying mistake?
The parties may have promised the accuracy of the relevant fact or allocated the risk that it was wrong. The mistake doctrine does not override that allocation. Identify the undertaking, its purpose and any warranty first, then ask whether an unallocated shared error meets the exceptional common-mistake requirements.