ch.19 - mistake

Question 1

what are the 2 types of mistake?

Answer 1

• mutual mistake
• unilateral mistake

Question 2

mutual mistake

Answer 2

both parties make the same mistake

Question 3

unilateral mistake

Answer 3

only one party makes a mistake

Question 4

elements of mutual mistake

Answer 4

1. Both parties, at formation
2. Make a mistake
3. Abt a basic assumption
4. The mistake has a material effect on the agreed exchange of performances

Question 5

mutual mistake element:
basic assumption

Answer 5

The parties must have assumed that they had not made a mistake as to the facts upon which the contract was formed

Question 6

mutual mistake element:
material effect

Answer 6

• The mistake must have a material effect on the exchange
• If the imbalance is so sever that it is unfair to require a party to carry it out, then the effect is material
• Courts will look at the motivation of the parties

Question 7

mutual mistake exception

Answer 7

mutual mistake is not available to excuse a party who bears the risk of the mistake

Question 8

bear the risk

Answer 8

A party bears the risk of many mistakes as to existing circumstances even though they upset basic assumptions and unexpectedly affect the agreed exchange of performances

Question 9

how may the bearing of the risk be allocated

Answer 9

• allocated by agreement
• conscious ignorance
• allocated by the court

Question 10

allocated by agreement

Answer 10

The contract states which party shall bear the risk

Question 11

conscious agreement

Answer 11

Party knows that they are not fully informed on some aspect of the transaction but does not take any affirmative action to determine the facts

Question 12

allocated by the court

Answer 12

A court may use all of the surrounding circumstances to determine that one party is more at fault than the other is

Question 13

unilateral mistake elements

Answer 13

1. One party
2. Makes a mistake
3. Basic assumption of the K
4. Material effect on parties performance
5. Knowledge OR unconscionable
6. Bear risk

Question 14

procedural unconscionability test

Answer 14

1. Inequality in the bargaining power OR
2. Unfair surprise

Question 15

substantive unconscionability test

Answer 15

1. Overly harsh allocation of the risk OR
2. Great price disparity

Question 16

unilateral mistake element:
knowledge

Answer 16

If one party knows (or should have known) that a mistake was made and does not correct it, then the contract might be undone provided that there was no risk shifting

Question 17

fault in causing the mistake

Answer 17

if the other party caused the mistake, then a court would clearly let that party suffer the consequences