Mistake can under Kenya law be-
(1)Mistake of Law
(2)Mistake of Fact
Mistake of law: when a party enters into a contract, without the knowledge of the law in the country, the contract is affected by such mistakes but it is not void. A contract is not voidable because it was caused by a mistake as to any law in force in India. The reason here is that ignorance of law is not an excuse at all. However if a party is induced to enter into a contract by the mistake of law then such a contract is not valid. Illustration A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Indian law of Limitation; the contract is not voidable.
Mistake of Fact: Where both the parties enter into an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. Explanation: An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement is not to be deemed a mistake as to a matter of fact.
Illustration: (1) A agrees to buy a certain horse from B. It turns out that the horse was dead at the time of bargain, through neither party was aware of the fact. The agreement is void. (2) A, being entitled to an estate for the life to B, agrees to sell it to C. B was dead at the time of an agreement, but both the parties were ignorant of the fact. The agreement is void.
Unilateral mistakes
A unilateral mistake under Kenya law is where only one party to a contract is mistaken as to the terms or subject-matter contained in a contract. This kind of mistake is more common than other types of mistake. One must first distinguish between mechanical calculations and business error when looking at unilateral mistake. For mechanical calculations, a party may be able to set aside the contract on these grounds provided that the other party does not try to take advantage of the mistake, or 'snatch up' the offer (involving a bargain that one did not intend to make, betrayed by an error in arithmetic etc.). This will be seen by an objective standard, or if a reasonable person would be able to know that the mistake would not make sense to one of the parties. Unless one of the parties 'snatched up' the one-sided offer, courts will otherwise uphold the contract.Mutual mistake
A mutual mistake under Kenya law occurs when the parties to a contract are both mistaken about the same material fact within their contract. They are at cross-purposes. There is a meeting of the minds, but the parties are mistaken. Hence the contract is voidable. Collateral mistakes will not afford the right of rescission. A collateral mistake is one that 'does not go to the heart' of the contract. For a mutual mistake to be void, then the item the parties are mistaken about must be material (emphasis added). When there is a material mistake about a material aspect of the contract, the essential purpose of the contract, there is the question of the assumption of the risk. Who has the risk contractually? Who bears the risk by custom? Restatement (Second) Contracts Sec. 154 deals with this scenario.This is easily confused with mutual assent cases such as Raffles v Wichelhaus.
In Raffles, there was an agreement to ship goods on a vessel named Peerless, but each party was referring to a different vessel. Therefore, each party had a different understanding that they did not communicate about when the goods would be shipped.
In this case, both parties believed there was a "meeting of the minds," but discovered that they were each mistaken about the other party's different meaning. This represents not a mutual mistake but a failure of mutual assent. In this situation, no contract has been formed, since mutual assent is required in the formation stage of contract. Restatement (Second) Contracts Sec. 20 deals with this scenario.
Common mistake
A common mistake is where both parties hold the same mistaken belief of the facts.The House of Lords case of Bell v Lever Brothers Ltd. established that common mistake can void a contract only if the mistake of the subject-matter was sufficiently fundamental to render its identity different from what was contracted, making the performance of the contract impossible.
Later in Solle v Butcher, Lord Denning added requirements for common mistake in equity, which loosened the requirements to show common mistake. However, since that time, the case has been heavily criticized in cases such as Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd.
Those categories of mistake in the United States exist as well, but it is often necessary to identify whether the error was a "decisional mistake," which is a mistake as a matter of law (faced with two known choices, making the wrong one), or an "ignorant mistake," unaware of the true state of affairs.
The difference is in the extent to which an innocent in the information chain, passing along or using or processing incorrect information, becomes liable. There is a principle that an entity or person cannot be made more liable merely by being in the information chain and passing along information taken in good faith in the belief that it was true, or at least without knowledge of the likelihood of falsity or inaccuracy.
Davis v. Pennsylvania Co. 337 Pa. 456
Roswell was the case of first impression on this issue in the state of New Mexico, and drew on cases in other jurisdictions interpreting the same language, most notably Davis v. Pennsylvania Co. 337 Pa. 456, 12 A.2d 66 (1940), which on similar facts to Roswell came to the same conclusion and exonerated the innocent actor in favor of shifting any responsibility for the loss to tortfeasors and those who enabled them to act by giving them unjustified authority. 56 N.M. at 114.The Davis case leads into another good analysis, in a case relied upon by Davis:
‘At what point does negligence
cease and bad faith begin? The distinction between them is that bad faith, or dishonesty,
is, unlike negligence, wilful. The mere failure to make inquiry, even though
there be suspicious circumstances, does not constitute bad faith, unless said
failure is due to the deliberate desire to evade knowledge because of a belief
or fear that inquiry would disclose a vice or defect in the transaction, – that
is to say, where there is an intentional closing of the eyes or stopping of the
ears.’
Union Bank & Trust Co.v. Girard Trust Co.
Union Bank & Trust Co.v. Girard Trust Co., 307 Pa. 468, 500-501, 161 A.2d 865 (1932).
A firm processing information in
order to transfer title using information provided by customers lacked the
intent to commit illegal or improper acts when the information furnished to it
was wrong. It was not part of its job description to know better, and it did
not know better, and charged only a nominal fee for the clerical work, clearly
not including any investigation. Further, it could not be in a conspiracy with
another party or several parties who knew the information was wrong but failed
to inform the title firm. The title firm could not unknowingly become part of a
conspiracy of which it was never informed, and from which it could derive no
benefit. The attempt to enhance liability or shift blame by filtering data
through an innocent party has been tried before, but where the conduit
providing document preparation does not know more than its informants, and was
not hired or paid to investigate, it is not liable in their place for using
their bad facts without guilty knowledge.