Mistake

Question 1

Definition of Mistake

Answer 1

Definition: A mistake is a belief which is not in accord with the facts.

Question 2

Types of Mistake

Answer 2

1. Mutual Mistake
2. Unilateral Mistake

Question 3

Elements of a Mutual Mistake

Answer 3

1. Both parties are mistaken as to the same set of facts
2. Must be a mistake about the basic assumption of the contract
3. Must be material
4. The adversely affected party must not bear the risk of the mistake
5. If the above requirements are met, the contract is voidable

Question 4

Elements of a Unilateral Mistake

Answer 4

1. Only one of the parties is mistaken
2. No relief is generally granted to the party making the mistakes

Question 5

Exceptions to unilateral mistake liability

Answer 5

1. Non-mistaken party knows that a mistake has been made
2. Mistake is caused by the fault of the non-mistaken party
3. Unconscionability applies

Question 6

Rule for Mistake of Fact

Answer 6

A mistake must be about existing facts, not about what may/will happen in the future

Question 7

Traditional Rule for Mistake of Law

Answer 7

A mistake of law is not a basis for avoiding a contract.

Question 8

Modern Rule for Mistake of Law

Answer 8

A mistake of law can serve as a basis for avoiding a contract. Reasoning: the modern trend treats laws in existence at the time of signing a contract as part of the total “facts.”

Question 9

Allocation of Risk Elements

Answer 9

1. As allocated by the contract
2. A party with limited knowledge of the facts treating limited knowledge as sufficient
3. A party with conscious ignorance of the facts
4. As allocated by a court