The Iran Nuclear Deal and the Doctrine of Mistake.

By David Bryan

The trove of declassified information that the Prime Minister of Israel Benjamin Netanyahu released on Monday May 1, 2018 to the world cannot be dismissed as trifling. His decision to do so, would no doubt come at great deliberation, to present the picture of the truth, and only the truth.

The essential take away from the Prime Minister’s revelations is that Iran lied about its nuclear program in deed, word and spirit to the contracting nations made up of United States, United Kingdom, France, Germany, Russia and China whilst negotiating the nuclear agreement or deal.

The extraordinary lengths to which Iran went to conceal its true nuclear ambitions is a testament to its conduct and deliberate intentions to throw the negotiators off the trail indefinitely, and together with this voluminous expose; it must now, carry substantial weight in the path of reassessing this nuclear deal.

But, even in light of all that was shown, which goes directly; not only to the root but flies in the face of the agreement being negotiated in good faith, it appears it has done nothing in moving the needle; especially when one hears such remarks that this is the reason for entering into the agreement with Iran, because Iran cannot be trusted, or that one was not naïve in the negotiations. This misses the crucial point and over-simplifies the fundamental issue at hand.

Surely, Prime Minister Netanyahu’s presentation intent was to break the logjam concerning the signatories’ ability to objectively look at the deal with a new fresh perspective which would entail ‘fixing or nixing’ the deal instead of adopting a defensive posture.

Contextually, having obtained such specialized knowledge regarding the pre-2015 nuclear program of Iran, the real question one has to ask is; whether the signatories would have entered into the same exact deal on the same exact terms. It is difficult to say otherwise and doubtful to state yes.

Doubtful is emphasized, simply because some commentators are forgetting to remember the numero uno point: that this deal is an executed lawful binding agreement or contract. An agreement, which is in fact, is not governed by statements but by the law.

Naturally then, how would the law be applied to this agreement, given now; this new set of circumstances. In short, the common law concerning this type of situation is albeit narrow and limited but made abundantly clear under the doctrine of mistake.

Generally speaking, “the most difficult and perhaps most important type of mistake occurs where the parties share a common misunderstanding which is in some way material to their respective decisions to enter into the agreement, and where the true state of affairs is only discovered after objective agreement has apparently been reached, whereupon only one of the parties wishes to withdraw from the agreement. Such mistakes are sometimes referred to as ‘common’, sometimes ‘misleading’ as ‘mutual’, and sometimes as ‘mistakes nullifying consent’.”

Where such circumstances exist as to mistake, the common law rule is basically stating “where both parties entered into a contract believing something to be true which was later found not to be true the contract has been declared void.

The leading case is the House of Lords case of Bell v. Lever Brothers Limited [1932] AC 161; were the speech of the majority was given by Lord Atkin who postulated the question: ‘ Does the state of the new facts destroy the identity of the subject-matter as it was in the original state of facts?’

The identity of the subject-matter in this case can be presumed to be the capability of Iran’s ability to enrich uranium and the time it takes to achieve that result for a nuclear weapon. This is of the uptmost importance, since the deal hinged and was signed on a false assumption that there was no nuclear program to that effect being conducted by the Iranians pre-2015.

This issue was addressed by Lord Atkin’s in his scholarly judgment, quipped:

“ Sir John Simon formulated for the assistance of your Lordships a proposition which should be recorded” “whenever it is to be inferred from the terms of the contract or its surrounding circumstances that the consensus has been reached upon the basis of a particular contractual assumption, and that assumption is not true, the contract is avoided: i.e, it is void ab initio if the assumption is of  present fact and it ceases to bind if the assumption is of future fact.”

Lord Atkin’s went on to state concomitantly of the meaning of “a contractual assumption”;

“ I think few would demur to this statement, but its value depends upon the meaning of “ a contractual assumption,” and also upon the true meaning to be attached to “basis,” a metaphor which may mislead. When used expressly in contracts, for instance, in policies of insurance, which state that the truth of the statements in the proposal is to be the basis of the contract of insurance, the meaning is clear. The truth of the statements is made a condition of the contract, which failing, the contract is void unless the condition is waived. The proposition does not amount to more than this: that, if the contract expressively or impliedly contains a term that a particular assumption is a condition of the contract, the contract is avoided if the assumption is not true.’

Lord Atkins, then logically stated that “various words are to be found to define the state of things which make a condition.” In contemplation of both parties fundamental to the continued validity of the contract,” “ a foundational essential to its existence,” “ a fundamental reason for making it” are phrases found… in the present case….But “ a fundamental reason for making a contract” may, with respect, be misleading.”

He said:-

“Nothing is more dangerous than to allow oneself liberty…,by importing implications which would appear to make the contract more businesslike or more just. The implications to be made are to be more than are “necessary” for giving business efficacy to the transaction, and it appears to me that, both as to existing facts and future facts, a condition would not be implied unless the new state of facts makes a contract something different in kind from the contract in the original state of facts”

From Bell’s case, it can be concluded; that the fundamental reason for making a contract with Iran, because Iran was untrustworthy is immaterial. What is material are the condition assumptions of the statements of truth, at the time of the signing of the Iran deal.

There are 110,000 files together with 183 disc, showing the true condition of statements of truth which proves the assumption that Iran did in fact had a nuclear program pre-2015; which Iran repeatedly vehemently denied existed at the time of negotiating the nuclear deal.

These new facts, destroys the identity of the subject matter of this agreement which was not only relative but germane to the deal. This intellectual dishonesty cannot therefore be arbitrarily being discounted.

Rather, either the deal is declared (i) void, which may present practical challenges, or (ii) a new deal is renegotiated altogether and or (iii) the deal is amended to encapsulate clauses that reflect, confirmation of the reality of Iran’s blatant bold-face dishonesty.