Case Summary: Raffles v. Wichelhaus (1864) 2 Hurl & C 906

Case Introduction

This case established the principle that a contract is void if there is no "meeting of the minds" (consensus ad idem). It deals with mutual mistake, where both parties misunderstood an essential contract term.

Facts

Mr. Raffles (seller) agreed to sell Surat cotton to Mr. Wichelhaus (buyer).
The cotton was to be delivered by a ship named "Peerless" from Bombay to Liverpool.
However, two ships named "Peerless" existed:
- One sailing in October (which the buyer expected).
- One sailing in December (which the seller referred to).
When the December ship arrived, the buyer refused to pay, claiming the delivery was late.

Issue

Was there a valid contract between the parties?

Judgment

The court declared the contract void due to mutual mistake.
Since both parties had different understandings of an essential term (which ship), there was no agreement or meeting of the minds.
The objective test confirmed that a reasonable person could not determine which ship was agreed upon, making the contract unenforceable.

Application to Indian Law

Under Section 20 of the Indian Contract Act, 1872, if both parties are under a mistake of fact essential to the contract, the agreement is void.
Since both Raffles and Wichelhaus had a different understanding of an essential term, this case aligns with Indian law on mutual mistake.