8 legal cases where the contract was void ab initio
A contract which is void ab initio is a contract which was invalid from its very inception.
A contract which is void ab initio is a contract which was invalid from its very inception. “Ab initio” is Latin for “from the beginning”, and is used to describe contracts which were legally unenforceable from the moment they were created. Contracts are void when one or more vitiating factors are present. Here are 8 instances in English contract law where the courts held the agreement in question to be void ab initio.
- Couturier v Hastie (1856) 5 HLC 672
The parties were the seller and buyer of a cargo of corn that was being transported from the Mediterranean to England. Unbeknownst to both of them, the cargo of corn had perished and already been disposed of before the parties entered into a contract for its sale. Once the parties learnt of their common mistake, the issue arose over whether the sale contract had been valid or not. The court held that the contract was void ab initio since both parties had been under the same mistake as to the physical possibility of performing the contract. Since there was no corn to be contracted upon in the first place, there was no contract.
- Anderson Ltd v Daniel  1 KB 138
The parties were the seller and buyer of artificial fertiliser. The Fertilisers and Feeding Stuffs Act 1906 had made it illegal to sell artificial fertiliser without providing an invoice detailing the chemicals in it. The seller had done just that, and the buyers refused to pay for the goods arguing that the whole contract itself had been rendered illegal. The court looked at the purpose of the statute (public protection by outlawing the sale of artificial fertilizers without chemical analyses), and ruled that by not complying with it, the contract between the parties was definitely illegal from the time of its formation.
- Hartog v Colin & Shields  3 All ER 566
The parties were the buyer and seller of 30,000 hare skins. On their written contract, the seller had mistakenly written down a price that was a third cheaper than what they had agreed to orally. Later realising the mistaken price, the seller refused to fulfil the contract. The court held that the mistake had made the contract void because of the “snap-up principle” (when it’s obvious that a party has made a mistake in the terms of an offer to enter into a contract, the other party cannot simply “snap up” the offer and enforce the contract). The price written down was found to be too low to be reasonable. There was therefore no contract because the parties.
- David Taylor & Son v Barnett Trading Co  1 Lloyd's Rep 181
The parties were the buyer and seller of a delivery of steak at a set price. When the contract was made, there was a legal limit on the sale of meat above a certain price, which the parties exceeded. The court held that the contract had been illegal ever since its formation since the price set had exceeded the legal limits available to the parties. The contract was therefore void ab initio.
- Sheik Bros Ltd v Ochsner (1957) AC 136
The parties had entered into a contract for one of them to grant the other a licence to farm some land for a certain quantity of sisal. Unbeknownst to them at the time of contracting, the land could not actually produce that quantity of sisal. The court held that the parties’ mistaken belief as to the land’s capacity for growing the sisal had made the contract impossible to perform. The quantity of crops to be produced was essential to the contract, so the contract was void.
- Ingram v Little  1 QB 31
The parties were caught in a scam where someone had pretended to be a reputable businessman, bought a car using a bad cheque, then quickly sold it to someone else. Once the scam was uncovered, the sellers argued that the contract they had with the scammer was void. The court (controversially) held that the case of mistaken identity rendered the contract void ab initio. The presumption in face-to-face transactions that people intend to contract with the person before them, was rebutted by the fact the seller had attempted to confirm the scammer’s purported identity.
- Associated Japanese Bank v Credit du Nord  All ER 902
The parties were caught in a scam for the sale of 3 engineering machines which had never existed in the first place. The court held that the non-existence of the machines had voided the contract, since it went to the root of what the contract was about. Without the machines, the fundamental nature of the contract had changed, so the parties common mistake as to their existence was sufficient to render the contract void ab initio.
- Shogun Finance Ltd v Hudson  UKHL 62
The parties were caught in a scam for a hire-purchase agreement over a car, where the scammer had pretended to be someone with good credit. The court held that the mistaken identity had voided the contract, especially because in a hire-purchase agreement, unlike in a regular sale, title of the property does not pass on to the buyer until after the credit has been paid. By pretending to be someone else, there was never consensus ad idem (a “meeting of the minds”) between the seller and the scammer.
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