Understand that a court _______ void a contract for a mutual mistake of both parties.

A promise the courts will require the parties to obey. Made by the courts to make business transactions smoother and more dependable.

A voidable contract that is canceled, permitting the person who canceled the contract to require the return of everything she gave the other party. She must herself return whatever she has received.

The major obstacles to legal assent

Mistake, misrepresentation, undue influence, duress, and unconscionability.

In contract law, an erroneous belief about the facts of the contract at the time the contract is concluded. Legal assent is absent when this occurs.

The result of an error by one party about a material fact.

A fact that is important in the context of the particular contract.

Shared by both parties to the agreement.

Generally does not void a contract, as courts are hesitant to interfere when one of the parties has a correct understanding of the material facts of the agreement.

Conditions where a court would invalidate an unilateral mistake

1. One party made a mistake about a material fact, and the other party knew or had reason to know about the mistake. 2. The mistake was caused by a clerical error that was accidental and did not result from gross negligence. 3. The mistake was so serious that the contract is unconscionable.

A situation where either party may choose to rescind the contract because both parties are mistaken about a current or past material fact.

Criteria for a mutual mistake to interfere with legal consent

1. A basic assumption about the the subject matter of the contract is present. 2. A material effect on the agreement must be present. 3. An adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement must be present.

An untruthful assertion by one of the parties about that material fact; it prevents the parties from having the mental agreement necessary for a legal contract. Might call for a rescinding of a contract, even if the person making the false assertion was entirely innocent of any intentional deception.

Innocent Misrepresentation

A false statement about a fact material to an agreement that the person making it believed to be true. The person lacked scienter. An aggrieved party cannot sue for damages in this case.

"Knowledge" in latin. A lack of this creates innocent misrepresentation, as the person in had no knowledge of their claim's falsity.

Negligent Misrepresentation

A false statement that a person could have known if they had used reasonable care to discover or reveal it. Treated as deception in contract law.

Fraudulent Misrepresentation (Intentional Misrepresentation)

A consciously false representation of a material fact intended to mislead the other party. If damages are sought, the defrauded party must have been injured by the misrepresentation.

Three Criteria for Fraudulent Misrepresentation

1. A false statement about a past or existing fact that is material to the contract. 2. Intent to deceive. 3. Justifiable reliance on the false statement by the innocent party to the agreement.

The active hiding of the truth about a material fact.

A failure to provide pertinent information about the projected contract. Until recently, courts were hesitant to use nondisclosure as a basis for rescinding a contract. Now treated as false assertion under certain conditions.

Four possible criteria for nondisclosure

1. A relationship of trust exists between the parties to the contract. 2. There is failure to correct assertions of fact that are no longer true. 3. A statute requires the disclosure. 4. The nondisclosure involves a dangerous defect.

Occurs when the party making the false statement claims to have or implies having personal knowledge of its accuracy.

Justifiable Reliance on the False Assertion

An injured party has no reasonable claim of fraud after relying on assertion. 

Special relationships in which one person takes advantage of a dominant position in a relationship to unfairly persuade the other and interfere with that person's ability to make his or her own decision. The more factors present, the more likely the contract can be rescinded.

The factors that enter into finding undue influence

1. Was the dominant party rushing the other party to consent? 2. Did the dominant party gain undue enrichment from the agreement? 3. Was the nondominant party isolated from other advisers at the time of the agreement? 4. Is the contract unreasonable because it overwhelmingly benefits the dominant party?

One party being forced into the agreement by the wrongful act of another, such as the threat of physical harm or extortion, the threat of a criminal or frivolous civil lawsuit, or the threatening of economic interests.

The threatening of a person's economic interests to force that party into an agreement.

A special category in Australia where one party makes an illegitimate threat to hold goods unless another party makes payment or enters into an agreement.

An instance where one of the parties has so much more bargaining power that that party dictates the terms of the agreement. Rescindable. Sometimes used in "take it or leave it" contracts.

A contract formed in an unconscionable way, which is implied to remove legal consent due to the lack of free will in the instance.

Is a mutual mistake void or voidable?

What is it called when both parties to an agreement under a common mistake?

What happens when a contract is void for mistake?

Can a unilateral mistake as to fact make a contract void?