Mutual Mistake Flashcards
Define Mistake RS 151
A mistake is a belief that is not in accordance with the facts
RS 152: When Mistake of Both Parties Makes a Contract voidable (Bilateral Contract)
(1) Where a mistake of both parties at the time a contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party.
(2) In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.
RS 153: When mistake of one party makes a contract voidable: (Unilateral Contract)
Where a mistake of one party at the time a contract was made as to a basic assumption on which was made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under RS 154, and:
(a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or
(b) The other party had reason to know of the mistake or his fault caused the mistake.
RS 154: When a party bears the risk of the mistake (when a party bears liability)-
A party bears the risk of a mistake when:
(a) the risk is allocated to him by agreement of the parties,
(b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treated his limited knowledge as sufficient, or
(c) The risk is allocated to him by the court on the ground that it reasonable tin circumstances to do so.
What is the difference between an assertion (RS159) and a belief (RS151)?
Assertion: a 3rd party telling something to another
Belief: personal
Mutual Mistake vs Equitable Fault
Mutual Mistake: Both parties don’t know of a mistake that will affect the contract
Equitable Fault: Both parties know of an issue that will effect a contract, but go ahead with the contract anyways.
