Mistake

Question 1

Mistake doctrine

Answer 1

an implied condition (subsequent) triggered when it appears that at time of contacting one / both parties were unaware of a critical difference between their perceived transaction and the actual subject matter of the contract

Question 2

Sherwood v Walker

Answer 2

A mistake that goes to the substance of the agreement as opposed to the mere quality will make a contract voidable

Question 3

Modern mistake doctrine test

Answer 3

Mistake by both parties at the time of contracting;
Mistake involved a basic assumption of the contract;
Mistake had a material effect on the transaction;
Party asserting excuse did not otherwise bear the risk of mistake under

Question 4

When does a party bear the risk of mistake

Answer 4

1. Express allocation:
   Risk allocation to her by agreement of the parties
2. Conscious ignorance:
   Party is aware, at the time contract is made, that she had only limited knowledge with respect to the facts to which the mistake relates but treats her limited knowledge as sufficient
3. Reasonable allocation
   Policy considerations: Risk is allocated to her by the court on the ground that it is reasonable in the circumstances to do so

Question 5

Unilateral mistake

Answer 5

There was a mistake by one party at the time of contracting;
It involved a “basic assumption” of the contract;
It had a material, adverse effect on mistaken party;
Mistaken party did not otherwise bear the “risk of mistake” under § 154 (same 3 alternative factors);
Plus:
Enforcement would be “unconscionable,” OR
Informed party had reason to know of mistake or mistake was his fault