It is impossible to transfer ownership to something which does not exist. Accordingly if the parties to an agreement bargain for a transfer of title to supposedly specific goods under some mistake, the question whether title passes will depend upon whether the thing which exists is the very thing (as distinguished from a thing having the qualities) which the parties describe. For this question of transfer of title, therefore, the question is merely one of identity of the actual subject-matter with the agreed subject-matter.18 Of course the fact that the property passes does not preclude the possibility of rescission on account of failure of the subject-matter to correspond in character and quality to what was supposed. But non-existence of the subject of the bargain precludes the possibility of a sale, that is, a transfer of ownership, and equally precludes the possibility of a lease or bailment. The fact that a sale, lease, or bailment, is impossible, has led to the inference that there also cannot be a contract to transfer something which does not exist; but there is no difficulty in making such a contract, and parties who agree to buy or sell non-existent property have done this. If they are not liable it is because under the circumstances supposed they should be excused from liability rather than because the ordinary requirements for the formation of a contract do not exist.14 Where neither party is legally chargeable for the error of the other, the mutual mistake as well as impossibility will excuse both from liability. Where, however, as may not infrequently be the case, the buyer's error in regard to the existence of goods of the description in the contract is due to the express or implied representation of the seller that such goods do exist, the seller will not be excused from liability on the contract, unless their non-existence is due to their fortuitous destruction.
13 See Williston on Sales, Sec.Sec.224, 225, for discussion of when this identity easts.
14 See infra, Sec. 1946.
Sec. 1540. Distinction between fraud, honest misrepresentation, and mistake. Fraud works legal consequences because it induces mistake on the part of the person defrauded; and honest misrepresentation when it produces legal consequences, does so for the same reason. Therefore the term mistake might well be used inclusively to cover all kinds of mental error, however induced; and fraud and honest misrepresentation would be subdivisions of the general heading mistake. It is usual, however, to use the term mistake as including only such mistake as is made without misrepresentation by the other party to the transaction; and the word is so used in this treatise. Sometimes the added connotation is introduced that the error is not due to the negligence or other breach of legal duty of the person laboring under the mistake,15 but this is to endeavor to confine the definition of mistake to cases where it has legal effect; and if the effort were carried to its logical conclusion it would be said that unless the mistake were mutual and related to a vital matter it was not a mistake. Such an attempt to give the definition of an ordinary English word a limited and artificial meaning is undesirable.