Taylor v Johnson

What happened?

Mrs Johnson granted an option over ten acres of land at a price of $15,000. She believed that figure was the price per acre — roughly ten times what the document provided, which set it for the whole. The option was granted to Laurence Taylor; his children were the contractual purchasers. He believed she was mistaken as to price or value, avoided reopening the subject, and told her untruthfully that he had no copy of the option to give her. When she realised, she refused to complete, and the purchasers sued for specific performance.

What did the Court decide?

The contract was set aside and specific performance refused. Mrs Johnson was not held to a sale of ten acres at a tenth of what she believed she was getting. Dawson J dissented.

Why does this case matter?

It is the Australian answer to a question the common law handles badly. At law a contract is formed on what the parties objectively appeared to agree, which in a case like this produces a binding bargain at a tenth of what the vendor thought she was selling for. Equity does not contradict that; it gives a remedy against enforcing it.

That structure matters for how you argue. The contract is voidable rather than void, so the relief is discretionary, delay and third-party rights can defeat it, and the party seeking it must come to equity in the ordinary way.

Note what does the work here. It is not that one party made a mistake, nor that the deal was a poor one. It is what the other party knew and what they did about it.

Exam and application relevance

Keep the two sides apart, because the test is not symmetrical. The party seeking relief must have been seriously mistaken about what the written contract said on a fundamental term — not merely disappointed about the bargain's worth. The other party need only have been aware of circumstances indicating a serious mistake as to that term's content or its subject matter, which is a lower bar than knowing precisely what the other had misread. Then ask whether they acted to stop it coming to light. A party who simply got a good deal, with nothing to put them on notice, falls outside this entirely, which is the usual way the answer goes wrong.

Check your understanding

Mrs Johnson misread her own document. What did the purchaser do that made the contract unenforceable against her?