## Facts

- The dispute involved a racehorse trainer, Hughes, who purchased oats from a farmer, Smith.
- Hughes believed he was buying old oats suitable for horses, but the oats supplied were new.
- No discussion occurred regarding the age of the oats at the time of contract formation.
- After delivery, Hughes refused to pay, claiming a mistake had occurred about the oats' age.
- Smith brought an action for payment, while Hughes argued there was no binding contract due to his mistaken belief.

## Issues

1. Whether contract formation should be assessed based on the parties’ subjective intentions or on the objective appearance of agreement.
2. Whether Hughes could refuse performance of the contract due to his unilateral mistake regarding the age of the oats.
3. Whether any misrepresentation or misleading conduct by Smith occurred to justify vitiating the contract.

## Decision

- The court held that no misrepresentation had occurred, as Smith did not contribute to Hughes's mistaken belief.
- The contract was upheld, with the court finding that the objective interpretation of words and conduct, rather than internal intentions, was determinative.
- Hughes was bound by the contract, as a reasonable person would conclude an agreement was made on the terms discussed.
- The argument that genuine consensus ad idem (meeting of minds) was required was rejected in favor of an objective standard.

## Legal Principles

- The objective test governs contract formation: parties are bound when their conduct would lead a reasonable person to believe agreement has been reached, regardless of undisclosed intentions.
- The doctrine of caveat emptor (“buyer beware”) applies, placing the risk of mistakes on the purchaser if the seller did not mislead.
- A contract cannot be vitiated solely by a unilateral mistake if the mistaken party’s belief was not induced by the other side.
- The law prioritizes certainty and practical policy over purely subjective consensus in commercial dealings.
- Limitations exist to the objective test, such as when one party knowingly “snaps up” an obvious mistake in an offer.

## Conclusion

Smith v Hughes is a leading authority establishing that in English contract law, the objective appearance of agreement prevails over subjective intention. The parties’ outward words and actions govern contract validity, ensuring certainty and fairness in commercial transactions. The case reinforced the caveat emptor principle and has shaped the development of offer and acceptance doctrines in English law.

Smith v Hughes (1871) LR 6 QB 597