Raffles v. Wichelhaus [1864] EWHC Exch J19 (April 1864)

A contract for Surat cotton 'to arrive ex Peerless from Bombay' was held void where two ships named 'Peerless' existed, one sailing in October, another in December. The parties intended different ships, so there was no consensus ad idem and no binding contract.

Facts

The plaintiff agreed to sell to the defendants 125 bales of Surat cotton, described as ‘guaranteed middling fair merchant’s Dhollorah, to arrive ex Peerless from Bombay.’ The defendants agreed to pay 17¼d per pound. When the cotton arrived in Liverpool by a ship called the ‘Peerless,’ the plaintiff offered to deliver the goods, but the defendants refused to accept them or pay.

The Ambiguity

It transpired that there were two ships named ‘Peerless’ sailing from Bombay—one in October and another in December. The defendants pleaded that they had intended to purchase cotton arriving on the October ‘Peerless,’ whereas the plaintiff was offering cotton that arrived on the December ‘Peerless.’

Issues

The key legal issue was whether a binding contract existed when the parties had contracted for goods to arrive on a ship called the ‘Peerless,’ but each party intended a different ship of that name. Specifically, the court considered whether parol evidence could be admitted to show the latent ambiguity and whether there was consensus ad idem (a meeting of the minds).

Arguments

For the Plaintiff (Milward)

Counsel for the plaintiff argued that the contract was for cotton of a particular description, and it was immaterial which specific ship named ‘Peerless’ delivered it. He contended that the defendant could not contradict by parol evidence a written contract that appeared valid on its face, and that the defendant’s subjective intention was irrelevant unless stated at the time of contracting.

For the Defendants (Mellish and Cohen)

Counsel for the defendants argued that once it appeared two ships called ‘Peerless’ were sailing from Bombay, a latent ambiguity arose. Parol evidence was therefore admissible to show that the defendant meant one ‘Peerless’ and the plaintiff another. Consequently, there was no consensus ad idem and therefore no binding contract.

Judgment

The Court of Exchequer held that there must be judgment for the defendants. The plea was a good answer to the declaration. The court accepted that since each party intended a different ship, there was no meeting of the minds, and thus no binding contract had been formed.

Implications

This case is a landmark authority on the doctrine of mutual mistake in contract law. It establishes that where there is a latent ambiguity in a contract term and the parties attach materially different meanings to that term, there is no consensus ad idem and thus no enforceable contract. The case demonstrates that parol evidence may be admitted to reveal such ambiguities. It remains a foundational case in teaching the requirement for a genuine meeting of minds in contract formation.

Verdict: Judgment for the defendants. The plea was upheld on demurrer, and no binding contract existed due to the absence of consensus ad idem.

Source: Raffles v. Wichelhaus [1864] EWHC Exch J19 (April 1864)