Mistake Flashcards
What does an operative mistake do to a contract?
An operative mistake makes a contract void ab initio.
What is a common mistake in contract law?
A common mistake is where both parties to an agreement are suffering from the same misapprehension.
What must be determined for a common mistake to affect the validity of the contract?
It must be sufficiently fundamental to affect the validity of the contract.
Does a mistake about the quality of goods void a contract?
No, a mistake about the quality of goods does not void the contract.
What is a mutual mistake in contract law?
A mutual mistake is where both parties are mistaken about different things and have negotiated at cross purposes.
How do courts decide the validity of an agreement in the case of a mutual mistake?
Courts apply an objective test to decide what a reasonable third party would believe the agreement to be.
When is a contract void due to a mutual mistake?
A contract is void if neither party was at fault.
What happens if one party is unreasonably mistaken in a mutual mistake?
The contract is not void if one party is unreasonably mistaken.
What is a unilateral mistake in contract law?
A unilateral mistake is where only one party is mistaken and the other party knows or is deemed to know of the mistake.
What must be satisfied to void a contract due to a unilateral mistake?
The following must be satisfied:
- the other party was aware or should have been aware of the mistake
- the mistake was in respect of a term that induced the contract
- neither party was at fault for the mistake
Give an example of a unilateral mistake as to the expression of intention.
Mispricing something is an example of a unilateral mistake as to the expression of intention.
What is a unilateral mistake as to the nature of the document signed?
It occurs due to blindness, senility or trick
When can there be unilateral mistake as to the identity of the person contracted with?
The contract can only be void for mistake if the seller establishes that identity was of vital importance rather than attributes.
In face-to-face scenarios, what presumption is made regarding the seller’s intention?
There is a presumption that the seller intended to deal with the person physically present.
What must the seller make explicit in face-to-face scenarios to void the contract for mistake?
The seller must make explicit that they intend to only deal with Party A rather than the person in front of them.
How is identity treated in communications at a distance?
Identity is presumed to be a term in the contract.
What is the effect of a contract being void for mistake?
The contract of sale is void and ineffective from the outset
What is the effect of a contract being voidable?
If a contract is voidable, ownership still passes on until it is voided
What happens if acts are illegal under statute?
The contract can be voidable
What are agreements that are illegal under common law?
- Agreements that are contrary to public policy
- Agreements in restrain of trade
How are illegal agreements contrary to public policy evaluated under common law?
Proportionality is considered
What is the initial status of agreements in restraint of trade under common law?
They are prima facie void
What test must agreements in restraint of trade satisfy under common law?
The reasoanbleness test.
