in matter of But the contract may be unconditional, although the parties are under a mistake respecting some matter which induces the contract. Thus, the defendant by deed sold and assigned a ship to the plaintiff, and covenanted that he then had power to sell the ship; the plaintiff sued the defendant for a breach of this covenant, and it appeared that the ship was a wreck at the time of the sale, of which both parties were ignorant; the Court held that the contract was absolute, and if the ship had ceased to exist as a ship at the time of the sale the covenant was broken, but if it then still existed as a ship, however damaged, there was no breach, as the covenant imported no obligation with respect to the condition of the ship (a). Upon the sale of a specific lease of premises which both parties supposed to be for a certain term, but which was afterwards discovered to be for a longer term and of greater value, it was held that there was no mistake as to the substance of the thing sold and a Court of Equity refused, after a lapse of time, to give any relief to the vendor (V). Agreement It seems that a common mistake of a matter of law induinduced by mistake of cing an agreement would modify its effect in equity, as apboth parties plied to the true state of the law, upon the same principle as a common mistake upon a matter of fact; and that a Court of Equity would grant relief against an agreement made under such circumstances (c). law. Mistake of as to the Where an agreement is capable of being applied to diffeboth parties rent things or in different ways, and is accepted by each application party with a different application, there is no real agreement agreement. between them and consequently no contract. It is not of the competent to a party to an agreement to assert an application of the agreement inconsistent with the terms agreed upon as expressing the common intention; but he is at liberty to show that it was understood by him to apply in a manner consistent with its terms, but different from the application accepted by the other party. (a) Barrv. Gibson, 3 M. & W. 390. (b) Okill v. Whittaker. 1 De G. & Sm. 83; 2 Phil. 338, see the passages from the Digest cited by V. C. Knight Bruce in this case. (c) Re Saron Life Assurance Soc. 2 J. & H. 408; 32 L. J. C. 206; and Stone v. Godfrey, 5 De G. M. & G. 76; 23 L. J. C. 769; Story Eq. Jur. § 125-138. In such cases the agreement is said to contain a latent Latent ambiguity, or one which appears only in the course of applyambiguity. ing it. "A latent ambiguity is where it is shown that words apply equally to two different things or subject-matters; and then evidence is admissible to show which of them was the thing or subject-matter intended” (a). What is called a patent ambiguity, that is, a doubt or Patent ambiguity. uncertainty appearing in the terms of the agreement as expressed by the parties themselves, cannot be altered or explained by extrinsic evidence; and if it is incapable of a rational interpretation, the agreement, at least to the extent of the ambiguity, is necessarily void (b). A contract was made for the sale by the plaintiff to the defendant of a cargo of cotton "to arrive ex Peerless from Bombay," and it appeared that there were two ships named Peerless then sailing from Bombay, and the plaintiff meant one and the defendant meant the other; it was held that there was no contract; and in an action for not accepting the cargo of cotton by the one ship Peerless, a plea that the defendant meant another ship Peerless, and that the plaintiff was not ready to deliver cotton from that Peerless, was held a good plea (c). Upon a sale of land by auction the particulars and conditions of sale were so worded that it was doubtful whether the timber on certain lots was included in the price of the lot or was to be valued separately, the plaintiff asserting the one construction and the defendant the other; specific performance in either view was refused, upon the ground that "if the one intended to sell upon one set of terms as he conceived them, and the other intend to buy according to a different set of terms, there was in reality no agreement between them" (d). Since the admission of pleadings upon equitable grounds Mistake as in actions at law under the C. L. P. Act, 1854, s. 83-86, a (a) Per Alderson, B., Smith v. Jeffryes, 15 M. & W. 561, 562. (b) See Coles v. Hulme, 8 B. & C. 568; Alder v. Boyle, 4 C. B. 635; and see ante, p. 122. (c) Raffles v. Wichelhaus, 2 H. & C. 906; 33 L. J. Ex. 160. (d) Higginson v. Clowes, 15 Ves. 516; Clowes v. Higginson, 1 Ves. & Beav. 524; and see Neap v. Abbott, Coop. 333; Baxendale v. Seale, 19 Beav. 601. matter for pleadings at law equitable grounds. upon mistake in an agreement may in some cases be set up in an action at law. The courts of law allow pleadings upon equitable grounds only where by the judgment at law they can do complete and final justice, and settle all the equities between the parties; and, therefore, having no jurisdiction to pronounce conditional judgments, or to impose or enforce special terms upon the parties, they allow pleadings upon equitable grounds only where a Court of Equity upon the same circumstances would decree an absolute, unconditional, and perpetual injunction to stay the proceedings at law (a). Hence, a mistake in an agreement, of the kind in which the relief in equity would be by reforming the agreement, cannot be relied on as ground for an equitable pleading; because the Court of Law cannot apply the proper remedy (b). Accordingly, a plea on equitable grounds that the defendant accepted a bill under a mistake as to the date was not allowed (c); and a replication on equitable grounds that a release by deed was executed in mistake of its legal effect was held bad on demurrer (d). But where a contract containing a mistake in its terms has been completely executed according to the terms intended by the parties, so that no object remains to be served by reforming the contract, the mistake may be relied upon as matter for an equitable pleading in answer to the contract, if alleged according to the written terms (e). So also, where it would be useless to reform the contract according to the terms intended by reason of lapse of time or other circumstances having rendered a further performance of it impracticable, the mistake may form an absolute and conclusive answer to the contract in an equitable pleading (ƒ). Where the mistake is of that kind that equity would grant an absolute injunction, it affords a complete answer to an action on the contract, and is a sufficient ground for an (a) See Bullen & Leake, Prec. Pl. 2nd ed. 486. (b) Perez v. Oleaga, 11 Ex..506; 25 L. J. Ex. 65; Solvency Mutual Guarantee Co. v. Freeman, 7 H. & N. 17; 31 L. J. Ex. 197. (c) Drain v. Harvey, 17 C. B. 257; 25 L. J. C. P. 81. (d) Teed v. Johnson, 11 Ex. 840; 25 L. J. Ex. 110. (e) Steele v. Haddock, 10 Ex. 643; Vorley v. Barrett, 1 C. B. N. S. 225; 26 L. J. C. P. 1. (f) Borrowman v. Rossel, 16 C. B. N. S. 58; 33 L. J. C. P. 111.' equitable pleading. Thus, an equitable plea to an action on a contract that the defendant was intended by both parties to sign it only as agent in order to bind his principal, and that he signed it in a manner to make himself personally liable by mistake, was held to be a good plea (a). So, a replication on equitable grounds to a plea of a release, that the release was worded to include the claim sued for by a mistake, was held good (b). In an action on a deed of dissolution of partnership in a business, for a breach of covenant in practising the business in a certain district, a plea upon equitable grounds, that the covenant was worded by mistake and contrary to the intention of the parties so as to include the district in which the breach of covenant was charged, was allowed, as showing grounds for a perpetual injunction against the action (c). AN agreement, -apparently complete and sufficient to create a contract, may be vitiated by fraud; and a party to an agreement may avoid its effect by showing that he was induced to make the agreement by the fraud of the other party. The question here arises as to what constitutes such fraud as entitles the party defrauded to avoid the effect of his agreement, and under what circumstances, and with what consequences such avoidance may take place. Fraud, in general, consists in inducing a person to act Fraud. upon some untrue statement or representation intentionally (a) Wake v. Harrop, 6 H. & N. 768; 1 H. & C. 202; 30 L. J. Ex. 273; 31 ib. 451. (b) Lyall v. Edwards, 6 H. & N. 337; 30 L. J. Ex. 193. (c) Luce v. Izod, 1 H. & N. 245; 25 L.J. Ex. 307. Misrepresentation of fact. Misrepre sentation of made for that purpose. In fraud, there is necessarily a mistake or misapprehension in the party defrauded, which alone would not vitiate his dealings with others; but there is the additional circumstance that the party with whom he deals intentionally causes the mistake for the purpose of effecting the dealing, and this precludes the party so occasioning the mistake from holding the other bound by it (a). . The misrepresentation by which the fraud is effected must be respecting some matter of fact. A misrepresentation of a matter of law is not a sufficient foundation to constitute fraud in law, because the law is presumed to be equally within the knowledge of all. Thus, the misrepresentation of the legal effect of a written agreement, which a party signs with a full knowledge of its contents, is not a sufficient ground in law for avoiding the agreement (b). But if a person in dealing with another misleads him, or takes advantage of his ignorance respecting his legal position and rights, though there may be no legal fraud, the case may come within the jurisdiction exercised by Courts of Equity to prevent imposition (c). A misrepresentation of a matter of intention not amountintention. ing to a matter of fact, though it may have influenced the agreement, is not a sufficient ground for avoiding the legal effect of the agreement. Where the plaintiff was induced to grant the defendant a lease of certain premises upon a representation by him that he intended to use the premises for a stated purpose, whereas he intended to use them and did use them for a different and illegal purpose; it was held the misrepresentation did not entitle the plaintiff to avoid the lease (d). Upon a contract of sale, a misrepresentation made by the purchaser to the seller, that certain partners of the purchaser, interested in the purchase, would not consent to his giving more than a stated sum for the subject of sale, was held not sufficient ground to entitle the seller to avoid the sale (e). So, if a party to an agreement, at the time of making it, (a) See ante, p. 171. (b) Lewis v. Jones, 4 B. & C. 506. (d) Feret v. Hill, 15 C. B. 207; 23 L. J. C. P. 185. (e) Vernon v. Keys, 12 East, 632. |