Raffles v Wichelhaus
Raffles v Wichelhaus  EWHC Exch J19, often called "The "Peerless"" case, is a leading case on mutual mistake in English contract law. The case established that where there is latent ambiguity as to an essential element of the contract, the Court will attempt to find a reasonable interpretation from the context of the agreement before it will void it. The case's fame is bolstered by the ironic coincidence contained within: each party had in mind a particular ship, with no knowledge of the other's existence, yet each ship was named "Peerless". Facts. The claimant  entered into a contract to sell 125 bales of Surat cotton at fair market price to the defendant at the rate of d. per pound. The contract specified that the cotton would be arriving in Liverpool on the ship "Peerless" from Bombay ("to arrive ex Peerless from Bombay"). It so happened that there were two British ships named "Peerless" arriving in Liverpool from Bombay, one departing in October and another departing in December. The defendant, according to statements presented in court, thought the contract was for cotton on the October ship while the claimant thought the contract was for the  cotton on the December ship. When the December "Peerless" arrived, the claimant tried to deliver it, however the defendant repudiated the agreement, saying that their contract was for the cotton on the October "Peerless". The claimant sued for breach of contract, arguing that the date of the ship was not relevant and the only purpose of specifying the name of the ship is that in the contingency that the ship sink en route, the contract could be voided. The issue before the Court was whether the defendant should be bound by the agreement to buy the cotton of the claimant 's "Peerless". Judgment. Though courts will strive to find a reasonable interpretation in order to preserve the agreement whenever possible, the court in "Raffles" could not determine which ship named "Peerless" was intended in the contract. Consequently, as there was no "consensus ad idem" ("meeting of the minds"), the two parties did not agree to the same thing and there was no binding contract. This is a classic example of mutual mistake, wherein both parties misunderstood the contract. Therefore, the defendants prevailed, and did not have to pay. Text of the judgment. Note that the process of demurrer is a  common law practice that seeks to dismiss a lawsuit on the grounds that the facts are true, and are not enough to warrant legal action. In this case, the defendant demurred, seeking dismissal. The Court agreed. The paragraphs with names at the front (Milward, Mellish) are that of the lawyers arguing for the respective parties, and present the arguments of the parties, interspersed with questions from Judge Pollock from the three Judge panel.