Solle v Butcher is a leading English contract law case on the doctrine of mistake and the role of equitable principles in setting aside contracts.
Decided by the Court of Appeal, it is especially significant for Denning LJ’s explanation of “equitable mistake” and the distinction between a contract that is void at common law and one that is voidable in equity. The judgement shaped the understanding of when a contract may be rescinded on the grounds of a shared misapprehension and the circumstances in which equitable relief should be granted.
This case brief explains the facts, issues, legal principles, and the reasoning of the judges in Solle v Butcher, relying solely on the material you supplied.
Facts of Solle v Butcher Case
In Solle v Butcher, the landlord (Mr Charles Butcher) leased a flat to the tenant (Mr Godfrey Solle). Both parties believed that the Rent Restrictions Act did not apply to the property. As a result, they agreed on a rent of £250 per year. Neither party was aware that the statutory maximum rent for the flat was in fact £140 annually.
The tenant later claimed repayment of the amount paid above the regulated rent. The landlord counterclaimed, asserting that the agreement should be declared void due to a common mistake relating to the rent regulation status of the flat.
In the proceedings below, it had been held that no relevant mistake existed. The case then reached the Court of Appeal.
Issues
The Court of Appeal in Solle v Butcher considered two central questions:
- Was there a relevant mistake of fact or of law? Both parties had entered into the lease under a shared misapprehension about the flat’s rent status.
- What kinds of mistake may render a contract voidable in equity? The court examined whether mutual or common mistake gave grounds for rescission and whether equitable principles allowed the contract to be set aside on terms.
Solle v Butcher Judgement
The Court of Appeal allowed the appeal. The majority held that the lease should be set aside on equitable grounds, based on the common mistake shared by both landlord and tenant. The court decided that the appropriate response was rescission on terms, meaning the contract would not simply be cancelled outright without conditions. Instead, the tenant would be given a choice: remain in the flat at the proper lawful rent or vacate the property.
The court also held that there would be no restitution of the overpaid rent.
Both Denning LJ and Bucknill LJ contributed significantly to the majority reasoning, though their emphases differed. Jenkins LJ dissented on important aspects, particularly concerning the existence of misrepresentation.
Denning LJ’s Judgement
Denning LJ’s reasoning in Solle v Butcher is the most frequently cited part of the case. He took the opportunity to clarify the law of mistake in both common law and equity.
Common Mistake and Misrepresentation
Denning LJ established that a contract could be set aside in equity where:
- one party’s mistake had been induced by a material misrepresentation, even if the misrepresentation was neither fraudulent nor fundamental; or
- one party knew that the other was mistaken about the terms or identity of the offer and failed to correct the misapprehension; or
- there was a common misapprehension, either about the facts or about the parties’ respective rights.
He stated clearly:
“It is now clear that a contract will be set aside if the mistake of the one party has been induced by a material misrepresentation of the other, even though it was not fraudulent or fundamental; or if one party, knowing that the other is mistaken about the terms of an offer, or the identity of the person by whom it is made, lets him remain under his delusion and concludes a contract on the mistaken terms instead of pointing out the mistake.”
Equitable Mistake
A major contribution of Solle v Butcher is Denning LJ’s reaffirmation that equity can intervene even where common law cannot. He explained:
“A contract is also liable in equity to be set aside if the parties were under a common misapprehension either as to facts or as to their relative and respective rights, provided that the misapprehension was fundamental and that the party seeking to set it aside was not himself at fault.”
Denning LJ considered the facts of Solle v Butcher as a clear example of such a common misapprehension. Both parties had genuinely believed that rent regulation did not apply, and this mutual mistake justified rescission on equitable terms.
Influence of Cooper v Phibbs
Denning LJ relied on Cooper v Phibbs as the leading authority on equitable mistake, noting that equity could intervene to ensure fairness where the law alone might produce an unjust outcome.
Rescission on Terms
Denning LJ emphasised practicality and fairness. He noted that simply voiding the lease without terms would unjustly penalise the tenant, who had relied on the landlord’s statements and had acted in good faith. He stated that terms should be imposed that would:
- allow the tenant to stay on at the lawful rent; or
- allow him to leave the flat if he preferred.
The intention was to prevent an “unjust eviction” and to ensure that neither party unfairly benefited from the mistake.
Bucknill LJ’s Judgement
Bucknill LJ agreed with the outcome that the contract should be set aside. He held that there had been a common mistake of fact, particularly concerning the identity and rent status of the flat. This justified rescission.
Like Denning LJ, he believed that rescission should be granted on terms, ensuring fairness to both landlord and tenant.
Jenkins LJ’s Judgement
Jenkins LJ disagreed with important elements of the majority reasoning. He found no basis for misrepresentation, stating:
“Fraud being neither charged nor proved, the plaintiff must be taken to have been expressing the opinion which he genuinely held at that time. The expression of an opinion bona fide held on a question of law is not misrepresentation.”
He stressed that both parties had knowingly expressed their genuine views, and neither should be able to use the other’s statements unfairly. Jenkins LJ was especially concerned that recognising misrepresentation in these circumstances could produce unjust results, such as depriving the tenant of his bargain.
Principles Established by Solle v Butcher
Solle v Butcher established several important principles about mistake and equity:
1. A contract can be voidable in equity even when valid at common law.
Denning LJ drew a sharp distinction between:
- mistakes that render a contract void (common law), and
- mistakes that render a contract voidable (equity).
2. Equity may set aside a contract for common misapprehension.
Provided that:
- the misapprehension was fundamental; and
- the party seeking to avoid the contract was not at fault.
3. Rescission may be granted on terms.
The court may impose conditions to achieve a fair outcome, as it did in Solle v Butcher, allowing the tenant a choice between staying at the regulated rent or leaving the property.
4. Misrepresentation need not be fraudulent to justify equitable relief.
A material misrepresentation, even if innocent, may support rescission.
Significance of Solle v Butcher
Solle v Butcher is widely remembered as a key statement of Denning LJ’s vision of equitable intervention in contract law. The case highlights:
- the flexible nature of equitable remedies;
- the importance of fairness when both parties act under a shared mistake;
- the judicial willingness to distinguish sharply between common law invalidity and equitable voidability.
Throughout the judgement, Denning LJ emphasised that the role of the court was to “do what is practically just”, and the final outcome reflected this approach.
Conclusion
Solle v Butcher remains an important case in English contract law for its treatment of mistake and the continued relevance of equitable principles. By setting aside the lease on terms, the Court of Appeal demonstrated how equity can correct the effects of a shared misapprehension while preventing unfairness to either party.
The case name Solle v Butcher stands as a leading authority on equitable mistake, the circumstances in which contracts may be rescinded on terms, and the limits of common law doctrines when fairness demands equitable intervention.