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Pritchard v Merchant's and Tradesman's Mutual Life Assurance Society (1858) 140 ER 885: V & L, 10.4-10.6

Facts:

Pritchard (P) was the beneficiary to a life insurance policy. P paid an insurance policy premium on behalf of the benefactor in order to renew the expired policy. Unbeknownst to both P and Merchant's and Tradesmans (M&T) the policy holder had died during the period when the policy was expired.

Issue(s):

P believed that they were entitled to receive the insurance payout from T&M as they had renewed the policy when P made a payment.

Ratio:

Where there is a contract for the sale of specific goods, and the goods, without the knowledge of the seller, have perished at a time when the contract was made, the contract is void: V & L, 10.6.

Analysis:

This was a 'common mistake' i.e. a mistake made by both parties as to the existence or availability of the subject matter of the contract, such contacts are void because there is nothing upon which the agreement can fasten, nothing to contract about.

Holding:

The beneficiary was unable to claim the amount that would otherwise be due to them had the policy been in effect.

Comments:

The principle has since been incorporated into s 11 of the Sale of Goods Act 1923 (NSW)


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