Contract Law

McRae v Commonwealth Disposals Commission (1951) 84 CLR 377

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Facts
  • The Commonwealth and the McRaes entered into a contract for a shipwreck (via tender)
  • It turned out the shipwreck had never existed
  • McRae sued
Held
  • Dixon & Fullgar JJ: Mistake depends on the construction of the contract. Can you imply a term, e.g. “the ship exists”
  • Whether this will be implied when both parties were mistaken depends on if one party has specific expertise. If they do, more likely to convey a term
  • If they don’t, the Courts will be reluctant as the other party could just as easily have checked
  • The courts implied that there was a term in the contract that the ship existed.
  • Therefore the Clth owed damages for breach of contract

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