Vitiating Elements: Mistake and Illegality

Question 1

When will a contract be void for mistake?

Answer 1

One or both parties can estbalish the contract was entered under a mistake that was so fundamental as to negate agreement / existence of contract

Question 2

Types of Mistake

Answer 2

1. Common Mistake
2. Cross-Purpose Mistake
3. Unilateral Mistake

Question 3

Requirements to establish Common Mistake?

Answer 3

1. Mistake precedes contract
2. Mistake induced contract
3. Both parties made same fundamental mistake
4. Mistake renders contract impossible or radically different
5. Neither party is at fault
6. No express provision in contract

INCLUDES: mistake over existence of subject matter (doesnt exist due to fire)

EXCLUDES: mistake over quality (e.g. forgetting breach)

Question 4

Requirements to establish Cross-Purpose Mistake

Answer 4

1. Mistake before contract
2. Mistake induced contract
3. Both parties believe there is a contract but disagree over a term
4. Impossible to resolve ambiguity

Question 4

Unilateral Mistake

Answer 4

1. Mistake precedes contract
2. Mistake incuded contract
3. Mistake as to identity of other party
4. Identity is of VITAL IMPORTANCE

No mistake if:
* face-to-face
* creditworthiness

Question 5

Is misrep or mistake more likely in following scenarios:
1. Face to face
2. Writing
3. transaction indicates rogue must have an attribute they do not have
4. person / entity rogue pretends to be exists and is known to mistaken party

Answer 5

1. Misrepresentation
2. Mistake
3. Mistake
4. Mistake

Question 6

When is a contract void for illegality?

Answer 6

Formation, purpose or performance involves commission of a legal wrong

Question 7

When is a contract illegal (void) at common law?

Answer 7

1. challenges sancity of marriage
2. sexually immoral
3. challenges jurisdiction of court
4. restraint of trade clause

Question 8

Rule regarding restraint of trade clause

Answer 8

GR: void
EXCEPTION: enforceable if:
1. protects legitimate business interest (customers, employees, trade secret); and
2. reasonable in area, duration and scope

Question 9

When is a contract void for illegality due to performance?

Answer 9

Both parties were aware performance was illegal

(if one party unaware they may still be able to enforce contract)