Home | Cases | Smith v Hughes

 

Key information

Court
Court of Queen's Bench

Judges
Cockburn CJ
Blackburn J
Hannen J

Issues
Agreement
Mistake

Other resources
Wikipedia entry

AustraliaLeading caseSmith v Hughes

Court of Queen's Bench [1871] LR 6 QB 597

 


Facts

Hughes trained racehorses. Smith was a farmer who offered to sell oats to Hughes. Smith showed Hughes a sample of the oats for sale, after which Hughes agreed to purchase them. Hughes believed that the oats he was shown were 'old oats'. This was important to him because racehorses only eat old oats. However, the oats supplied, and which were shown to Smith in the sample, were in fact 'new oats' ('green oats'). Upon discovering the oats were 'new', Hughes endevoured to return them and avoid paying; Smith refused to take them back and sued for the price.

Held

The Court held that there was a contract; it did not matter that the subjective intention of the parties differed - that is, that Smith intended to sell new oats and Hughes intended to buy old oats. Hughes' conduct was such that a reasonable person would believe he was consenting to the terms offered by Smith.

Cockburn CJ

On the issue of 'consensus ad idem'

'It only remains to deal with an argument which was pressed upon us, that the defendant in the present case intended to buy old oats, and the plaintiff to sell new, so the two minds were not ad idem; and that consequently there was no contract. This argument proceeds on the fallacy of confounding what was merely a motive operating on the buyer to induce him to buy with one of the essential conditions of the contract. Both parties were agreed as to the sale and purchase of this particular parcel of oats. The defendant believed the oats to be old, and was thus induced to agree to buy them, but he omitted to make their age a condition of the contract. All that can be said is, that the two minds were not ad idem as to the age of the oats; they certainly were ad idem as to the sale and purchase of them. ...'

BlackburnJ

On the issue of 'consensus ad idem'

'I apprehend that if one of the parties intends to make a contract on one set of terms, and the other intends to make a contract on another set of terms, or, as it is sometimes expressed, if the parties are not ad idem, there is no contract, unless the circumstances are such as to preclude one of the parties from denying that he has agreed to the terms of the other. The rule of law is that stated in Freeman v Cooke. If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms.'

 

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