Centrovincial Estates v Merchant Investors Assurance [1983]

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Centrovincial Estates v Merchant Investors is a case which is concerned with the mistake chapter in contract law

Facts of Centrovincial Estates V Merchant Investors Assurance

A premises was rent out to Defendants for 68,320 pounds and this price was subject to review. After the review the price of the rent would be set accordingly the current market value.

Claimant’s wrote a letter to defendant’s that the new value is 65,000 pounds. The Deendants were paying 3000 ounds more than this price so when they heard this offer from the claimant’s they gladly accpeted it.

When the claimant’s realized their mistake they contacted defendant and said that the new rent is 126,000 pounds. To this the defendants said as they had made a contract on the previous offer and now that contract cant be revoked.

Issue:

The issue in this case was that whether there was a contract formed between the claimant and the Defendant? Whether the Defendant knew about the mistake of the claimant?

Decision:

As the rule was that if the defendants knew of the mistake of the claimants then there is no contract formed. But in Centrovincial Estates V Merchant Investors the courts could not find any evidence against the defendants.

So the court ruled that there was a contract between the defendant and the cliamant and now the cliamant cannot revoke the contract.

Crticism on Centrovincial Estates v Merchant Investors

  • This case was decided on the principle of estoppel “Once you made a promise and the other party relies on that promise and suffers a detriment you are stopped from going back to that promise
    • As many scholars said that the defendants didn’t suffer any loss but infact they were benefitted by paying lower rent than before
  • Professor Atiyah said that ” I don’t see why the offeree could create strict legal rights tohrough bare act of acceptance”

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