Mistake and Illegality Flashcards
There are 3 types of mistake:
Common mistake
Cross purpose mistake
Unilateral mistake
What is a mistake in contract law?
Error made by one of both parties that negates statement rendering contract void or voidable
What is a common mistake
Both parties make the SAME mistake
[both parties think the subject matter is something else]
Boat is destroyed before contract.
When does a common mistake render the contract void?
-Mistake is fundamental [big]
-Mistake made before the contract and induce it
-Contract doesn’t contain the mistake
What is a cross purpose mistake?
A mistake where parties are at a cross purpose and both have no clue what was agreed.
Ambiguous
What is a unilateral mistake
This occurs when only one party is mistaken
[as to the identity of the other party]
What are the 2 types of illegal contracts?
Illegal at formation
Illegal as to performance
Example of a contract illegal at formation
A contract to commit a crime
What happens if a contract is performed illegally
If both people knew - contract is void
If one party knew - innocent party may enforce the contract
If someone has purchased an object is this a bar to recission
Yes
If someone uses a stolen passport to obtain a loan for a car from The Company. Then sells the car to another woman. Can the Company reclaim the car?
- Yes as a stolen passport was used meaning the identity of the person was not who they thought they were
- Therefore the contract is void due to mistaken identity
- As cannot legally sell to woman
- Can reclaim the car
The seller sold the car to the buyer based on a fraudulent cheque. Buyer then sold car to bona fide purchaser [innocent party]. Can the seller get the car back?
- No, recission is barred if a bone fide purchaser has acquired an interest
- The mistake was about the clients creditworthiness and not identity
