Equity as a vehicle for law reform: The case of unilateral mistake

In this paper I ask whether English Law should permit rescission for unilateral mistakes in the formation of contract, in circumstances where the defendant (D) knew or should have known about the claimant’s (C) mistake, and if so, should Equity be (re)employed to deploy the remedy. The paper introduces the Caveat Emptor Common Law rule on this issue, which rules out rescission, and the various considerations that count in its favour. I argue that neither considerations from efficiency, nor those based in ethics can justify the current rule, and that new, flexible and morally-sensitive resolution is called for. If we examine the way in which Equity intervenes to reform areas of law where the Common Law fails to provide a satisfactory solution to legal disputes, we will see that the Caveat Emptor rule displays exactly the kind of defects that Equity does a very good job at remedying. The law on the duty to disclose information at the precontractual stage emerges as an excellent example for Equity’s great potential as a vehicle for improving the law in a measured, nuanced and imaginative way.