Excuses to Performance Flashcards
Mutual Mistake
R2nd Section 152(1)
Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake . . . .
Mutual Mistake Element 1
1) there is a mistake of fact existing at the time the K/deal is made
A mistake of fact cannot be a prediction of a future event or occurrence
Mutual Mistake Element 2
2) the mistake relates to a basic assumption of the K
Mistake must go to the very nature of the agreement, essence of the agreement
Mistake relevant to the quality or value only are insufficient for rescission of K
Mutual Mistake Element 3
o 3) the mistake has a material impact on the K/deal
Mutual Mistake Element 4
o 4) the adversely affected party did not assume the risk of mistake either by the terms of the agreement or through willful ignorance (conscious ignorance)
Mutual Mistake Element 4
Assumption of risk OR conscious ignorance
Assumption of risk: party bears the risk of a mistake when
* (a) the risk is allocated to him by the agreement of the parties, or
* (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or
* (c ) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so
Conscious ignorance—when the party fails to do their due diligence prior to entering into the K
Mutual Mistake
Remedy is Recission
is a legal remedy where a court effectively cancels a K treating it as if it never existed and restoring the parties to their positions before the K was formed
Mutual Mistake
Remedy is Reformation
Applied for mistakes in a written agreement
A legal remedy whereby the court does not excuse the parties duty to perform, but rather re-drafts or redacts the nature of the duties under the K to confirm the parties’ mutual intent when they entered in to the agreement
Unilateral Mistake regular RULE R2nd§153
o Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake . . . , and
A) the effect of the mistake is such that enforcement of the contract would be unconscionable, or
B) the other party had reason to know of the mistake or his fault caused the mistake.
Unilateral Mistake ELEMENTS
1) there is a mistake of fact existing at the time the K/deal is made
2) the mistake relates to a basic assumption of the K
3) the mistake has a material impact on the K/deal
4) the adversely affected party did not assume the risk of mistake either by the terms of the agreement or through willful ignorance (conscious ignorance)
5) AND the mistake makes the K unconscionable
* OR the other party had reason to know of the mistake OR it was his fault
Unilateral Mistake
Remedies
Recission and perhaps Restitution
* Prof says Restitution may also be applied to remedy both parties bc one party would be unjustly enriched and other party would not be
Unilateral Mistake
Remedy
Reformation
Changed Circumstances
what is it?
o The threat of liability should encourage parties to plan and protect against adverse events that are foreseeable.
In some limited situations, courts will relieve party of its duty to perform because of changed circumstances, but only when it is in the interest of equity and justice.
CC Impossibility
what is it?
Performance of the agreement must be literally impossible, obviously.
CC Impossibility RULE
If, after a contract is made, a party’s performance is made impossible without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made… unless the language of the agreement or the circumstances indicate the contrary.
