Mistake

Question 1

What is an Operative Mistake?

Answer 1

A Mistake that Voids the Contract due to its gravity.

Question 2

What are the Three Types of Mistake?

Answer 2

Common Mistake:

• Both Parties are Mistaken as to the same fundamental fact; such that
• The Contract is Frustrated or essentially different in subject from the what the Parties Intended.

Mutual Mistake:

• Both Parties are reasonably Mistaken as to different fundamental facts; such that
• There is no genuine agreement between the Parties.

Unilateral Mistake:

• One Party is Mistaken as to a fundamental fact; and
• The Counterparty has Actual or Constructive Knowledge thereof.

Question 3

When does Common Mistake Disapply?

Answer 3

• The Mistake is not fundamental.
• One Party is responsible for the Mistake.
• The Contract explicitly accounts for the risk of Mistake.

Question 4

What are the Consequences of an Operative Mistake?

Answer 4

Voiding and Restitution:

• All cases.

Voidability:

• Only in cases of Unilateral Mistake of Identity in Face-to-Face Transactions; unless
• Identity was fundamental to the Contract, in which case, the Remedy is Voiding and Restitution; however
• Good Title will pass to Equity’s Darling in such cases.

Equitable Remedies may also be awarded on a case-by-case basis.