In Great Peace Shipping Ltd. v. Tsavliris Salvage (International) Ltd. [2002] 3 W.L.R. 1617 the Court of Appeal considered the circumstances in which a contract, entered into as a result of a mistaken assumption shared by the parties, would be invalidated. In that case, the defendant, a salvage operator, agreed to provide its services to the owners of The Cape Providence, which had suffered severe structural damage. Unfortunately, the only tug that the defendant could find to perform these services was six days away from the vessel. This gave rise to concerns over crew safety if the vessel sank whilst awaiting the tug. The defendant’s brokers, therefore, sought to hire a vessel which was sufficiently close to be able to evacuate the crew if necessary. The brokers were informed by a well-respected information agency that The Great Peace, a vessel owned by the claimant, was “in close proximity” to the stricken vessel, approximately 35 miles away. As a result, the defendant’s brokers negotiated with the claimant for the hire of The Great Peace for a period of five days, both parties assuming that the information as to The Great Peace’s location was correct. On discovering that the vessels were in fact some 410 miles apart, the defendant hired an alternative vessel and sought to cancel the contract with the claimant. Proceedings were commenced to recover the full amount of the hire, or alternatively damages for breach of contract. The defendant resisted the claim on the ground that the contract was either void at common law or voidable in equity, as both parties had laboured under a fundamental mistake at the time of contracting. Both arguments were rejected by Toulson J., at first instance, and by Lord Phillips of Worth Matravers M.R. delivering the judgment of the Court of Appeal.
