Mistake

Question 1

mutual mistake

Answer 1

voidable under mutual mistake if

1. both parties made a mistake at contract formation

about basic assumptions which the contract was made and mistake has a material effect on agreed exchange of performances

• had material effect on transaction

Question 2

exception to mutual mistake : bearing the risk

Answer 2

not available as a defense for a party who bears the risk of mistake

party bears the risk of mistake if

1. contract has an explicit “as is” clause
2. party knew they were not well informed about certain facts, and they still proceeded with the contract (ignorance)
3. court decides its reasonable for that party to bear the risk based on overall circumstances

Question 3

made a mistake

Answer 3

When a party believes something about the deal that doesn’t match the actual facts at the time the contract was made

Question 4

basic assumption

Answer 4

when someone makes a mistake in contract
Bcz they believed something important about the deal that turned out to be false

Ask if they would have still agreed to the contract if they knew the actual facts?
If no - then mistakes likely involves something IMPORTANT to the deal

A contract being profitable doesn’t count as a fundamental assumption

Question 5

material effect

Answer 5

if someone claims that there is a mistake in a contract, they have to prove that the difference in what each party expected to get is really unfair,

means showing one side is getting way less, and one is getting way more.

Question 6

unilateral mistake

Answer 6

A contract can be canceled by one party at the beginning of the contract

Made a mistake about something important in the deal

The mistake had a significant impact on what both sides agreed to do

One party
Basic assumptions of law
Knowledge and unconscionability (already met, mistake is surprise, and it is procedural unconscionability)
Bearing the risk of mistake (conscious ignorance, allocating the risk)

Question 7

To cancel the contract, party must prove

Answer 7

Would be very unfair to enforce the contract (unconsionable)
The other party either caused the mistake or knew about it and still went ahead with the contract

Question 8

exception to unilateral mistake: bearing the risk

Answer 8

If someone makes a mistake in a contract, they cant use it as a defense if
The contract specifically says they have to take that risk
They knew they didn’t know something important but still went ahead with the contract
Court decided it’s fair for them to take the risk based on the situation

Question 9

can parties claim mutual mistake if both parties agreed on assumption of risk?

Answer 9

NO , the parties agreed to a clause for as is, can not claim mutual mistake