Mistake Flashcards
Mistake
- Belief not in accord with the facts
- must be present at the existence of the contract
- must be material & have a significant affect
Mutual Mistake
If both parties make a major mistake affecting the deal, the contract can be canceled by the harmed party.
The person responsible for the mistake cannot cancel the contract.
The contract is voidable by the affected party unless they bear the risk of the mistake.
Unilateral Mistake
One party makes a mistake that negatively affects the deal.
They can cancel the contract if:
- They’re not responsible for the mistake.
- Either enforcing the contract would be unfair, or the other party knew about or caused the mistake.
- The mistake must be material and harm the party who didn’t bear the mistake.
if party bears risk of mistake
They agreed to take on the risk in the contract.
They knew they didn’t have all the facts when making the contract but decided their limited knowledge was good enough.
The court decides it’s fair to hold them responsible for the mistake based on the situation.
Effect of faulty party seeking relief
CANNOT HAPPEN UNLESS they made a mistake about the facts when acting honestly or fairly
Written Mistakes
If both parties make a mistake about what a written agreement says or means, the court can change the writing to match what they actually agreed on.
Mistake v. Misunderstanding
Mistake = occurs when the parties agree to the same incorrect thing or term
misunderstanding = when each party agrees to different things which negates the meaning of mutual assent
Misunderstanding
No mutual assent because both parties think different things
Therefore no contract is formed
MISTAKES THAT MAKE CONTRACT VOIDABLE
- Material mistake
- Enforcement would be considered unconscionable
- The mistake was made in good faith
- P would not be prejudiced by the loss of the deal
- Prompt notice of the error was given
