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Cards In This Set
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Some mistakes make contracts
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Defective. .
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Mistakes are classified as
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Unilateral or mutual
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Some courts classify a mutual-mistake contract as
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Void and some classify such contracts as voidable; however the effect is to make them unenforceable.
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Generally, a unilateral mistake has no effect on the validity of a contract unless:
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The non-mistaken party had cause to know or knew about the mistake
In some states, the mistaken party has not been negligent and the other party has not relied on the contract |
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The parties can specify
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In the contract what the effect of mistake will be on the validity of the contract. In that case the contract provisions will apply.
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Mutual mistakes that do not make a contract defective include:
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Mistakes as to value, quality, or price Mistakes as to the terms of the contract Mistakes of law Mistakes as to expectations |
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Fraud
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Inducing another to contract as a result of an intentionally or recklessly false statement of a material fact . Fraud in the inducement makes a contract voidable. Fraud in the execution makes a contract void.
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If it was reasonable for the misled party to have relied on the innocent misrepresentation, it will
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Make the contract voidable.
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Undue influence is
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The exercise of such influence over the mind of another that the latter does not exercise free will. It renders the contract voidable by the injured party
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The key element in undue influence is
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that the dominated party is helpless in the hands of the dominating person.
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In order to constitute duress
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The threat must be made by the other party and must be illegal or wrongful.
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The remedies available to victims of acts that render contracts voidable are:
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Sue to recover any things of value given up plus damages
Refuse to perform an executory contract Sue to have the contract judicially declared void Sue for reformation of a written contract that does not accurately express the parties' agreement |
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Remedies for breach of contract because of mistake, fraud, duress, or undue influence are:
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A lawsuit for recovery of any money, goods, or other things of value, plus damages
Refusal to perform if the contract is executory on the part of the innocent party A suit to have the contract judicially declared void and to recover damages A suit for reformation of a written contract that does not express the parties' agreement. |
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What is the difference between a mutual mistake and a unilateral mistake?
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A mutual mistake occurs when both parties to a contract make the same mistake while a unilateral mistake occurs when only one party makes a mistake.
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Why is the area of mistake one in which significant variations exist among the states regarding the enforceability of contracts?
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The area of mistake is one in which significant variations exist among the states regarding the enforceability of contracts in order to avoid harsh results.
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