...QUESTION 1 IF ONE OR BOTH PARTIES ENTER INTO A CONTRACT UNDER SOME MISUNDERSTANDING OR MISTAKEN ASSUMPTION, IN WHAT CIRCUMSTANCES WILL THE COURT INTERVENE TO HOLD THE CONTRACT VOID AND UNENFORCEABLE ON THE GROUNDS OF MISTAKE? In contract law, a mistake is an erroneous belief made by parties when contracting. Mistakes are not generally enforceable at the law court and are often treated as void or voidable. Mistakes are generally irrelevant, but exception to this places great emphasis on operative mistake which includes common mistake, mutual mistake and unilateral mistake. Mistakes or misunderstanding may render a contract void when the following are presents; * Mistake of the law; When a party enters into a contract, without the Knowledge of the law in the country, the contract is affected by a mistake making it unenforceable on the grounds of ignorance. Note also that the ignorance of the law is not an excuse. CASE Lydia a foreigner entered into contract with Amina in Ghana with the view that, Amina should supply heroine on a contract basis for a token of GHC 5,637,600 for every supply made. Unknowingly to Lydia that it is illegal to trade heroine in Ghana. Hence the contract is void and loses its enforceability at the law court. * Mistake of Fact; This happens where both parties enter into an agreement under a mistake as to a matter of fact essential to the agreement, the contract is declared void. For instance, ‘A’ agrees to buy a certain horse from ‘B’. It turns out...
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...Mistake Mistake exists where parties to a contract think that they have agreed when in actual fact they have not. For a party to be able to set a contract aside on the basis of mistake he has to establish the following. The mistake should be one of fact not law, the mistake must concern a material fact and it must be a reasonable mistake. The types of mistakes in the contract of law include unilateral mistake, mutual mistake and common mistake. Bilateral/common mistake This exists where both parties are mistaken .They would be thinking that they have agreed when in actual fact there is a common mistake on either side, courts have usually allowed both parties to set such a contract aside. The academic argument which is well founded is that such a contract should be treated as void because one of the requirements that is (consensus ad idem) is missing. An error on the part of both parties of a transaction regarding the same matter, such as if two people sign a contract under a certain understanding, while the contract actually conveys a different meaning than they each may have expected. That a mistake of law does not invalidate a contract was held in Ncube V Ndlovu 1985 (2) RLR 281. The appellant seduced a major daughter of the respondent. The appellant then signed an agreement undertaking to pay the respondent damages for seduction. He wanted to avoid the contract on the basis that he was mistaken as to the law that is he did not know that a father has no right to sue for...
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...blawGENUINENESS OF ASSENT A party who demonstrates that he or she did not genuinely assent to the terms of a contract may avoid the contract. Genuine assent may be lacking due to mistake, fraudulent misrepresentation, undue influence, or duress. As was true with contracts entered into by persons lacking contractual capacity, contracts lacking genuine assent are voidable, not void. Ch. 14: Contracts: Genuineness of Assent - No. 1 West’s Business Law (8th ed.) MISTAKE Mistake: The parties entered into a contract with different understandings of one or more material fact(s) relating to the subject matter of the contract. Unilateral Mistake: A mistake made by one of the contracting parties. Generally, a unilateral mistake will not excuse performance of the contract unless: (1) the other party to the contract knew or should have known of the mistake; or (2) the mistake is one of mathematics only. Mutual Mistake of Fact: A mistake on the part of both contracting parties as to some material fact. In this case, either party may rescind. Mutual Mistake of Value: If, however, the mutual mistake concerns the future market value or some quality of the object of the contract, the contract can normally be enforced by either party. Ch. 14: Contracts: Genuineness of Assent - No. 2 West’s Business Law (8th ed.) FRAUDULENT MISREPRESENTATION When an innocent party consents to a contract with fraudulent terms, he or she may usually avoid the contract, because...
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...enforceable contract. For this purpose, it is required that one party should make an offer and the other party should accept the offer. Similarly there should be a meeting of the minds. Other requirements of a valid contract our consideration and the capacity to enter into the contract. It needs to be noted that the law of contract provides that the party making the offer can revoke the same at any time before the other party has accepted the offer (Peel, 2007). At the same time, it is also required that the offer should be accepted unequivocally by the party to whom the offer has been made. In this regard, the postal role of acceptance provides that when post has been contemplative as the means of communicating the acceptance, the contract is considered to have been completed when the party accepting the offer, places the letter containing the acceptance in the mailbox. In this way, this rule is an exception to the general rule according to which, the acceptance is treated as concluded when the party making the offer receives the acceptance. The postal role was provided in the famous case of Adams v Lindsell (1818). In the same way, this rule has also been confirmed by the court in Household Fire and Carriage Accident Insurance Co v Grant (1879). In the same way, the court also stated in Brinkibon Ltd v Stahag Stahl and Stahlwarenhandelsgesellschaft GmbH (1983) that acceptance is considered as effective when the party accepting the offer places the letter containing acceptance in...
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...void ab-initio, i.e. it is not enforceable at the option of either party. Example: X has one Maruti car and one fiat car. He wants to sell fiat car. Y does not know that X has two cars. Y offers to buy X's Maruti car Rs 50,000. X accepts the offer thinking it to be an offer for his Fiat car. Here, there is no identity of mind in respect of the subject of the subject matter. Hence there is no consent at all and the agreement is void ab-initio. Meaning of Free consent: It is one of the essential elements of a valid contract as it is evidenced by section 10 which provides that all agreements are contracts if they are made by the free consent of the parties... according to section 14, consent is said to be free when it is not caused by (a) Coercion, or (b)Undue influence, or (c) Fraud, or (d) Misrepresentation, or (e) Mistake. Effect of Absence of free consent: When there is consent but it is not free (i.e. when it is caused by coercion or undue influence or fraud or misrepresentation), the contract is usually voidable at the option of the party whose consent was so caused. COERCION Meaning of coercion[section 15]: It means compelling a person to enter into a contract, by use of physical force/activities forbidden by Indian penal code, OR threatens to do activities forbidden by I.P.C, OR threatens to damages the property. Effect of coercion: Voidable and can be canceled at the option of aggrieved party. OR A 'suicide and a...
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...A mistake is a false assumption made by one or both parties in the formation of a contract and may be used as grounds to invalidate the agreement. There are three types of mistake in the law of contract. These are common mistake, mutual mistake and unilateral mistake. A common mistake is where both parties hold the same mistaken beliefs of the facts. A common mistake ca only void a contract if the mistake of the subject matter was sufficiently fundamental to render its identity different from what was contracted, making the performance of the contract impossible. There are two situations of common mistake. These are the case of res extincta and the case of res sua. In the case of res extincta, there is a common mistake asto the existence of the subject matter of the contract. For example, if A agrees to sell his car to B and unknown to both persons, the car had at the time of sale been destroyed by fire, the contract will be void because A has innocently undertaken an obligation which he cannot possibly fulfill. The following case is an application of res extincta. In the case of Couturier v Hastie, Hastie dispatched a cargo of corn from Salonica and sent the chaterparty a bill of lading to their London agents so that the corn might be sold. The London agents employed Couturier to sell the corn and a person named Callander bought it. Unknown to the parties the cargo had become overheated and had been landed at the nearest port and sold, so that when the contract was...
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...Essay Title: “Factors that affect free consent in a contractual agreement under the Contract Act 1950”. 1. Coercion. Since a contract will only be binding if the parties voluntarily consent to it, it is obvious that where one party is forced to consent by threats or undue persuasion by the other, that consent should be invalid.One form of such threats is ‘coercion’ and has been defined in section 15 of the Contracts Act for the purposes of section 14 (as discussed in para 2.1) which, among others, require ‘free consent’ of contracting parties. The latter section goes on to provide that consent is free when it is not caused by ‘coercion’ as defined by section 15, or others such as ‘undue influence, fraud, misrepresentation and mistake’. The relevant part of section 15 reads as follows: “ ‘Coercion’ is the committing, or threatening to commit any act forbidden by the Penal Code, or the unlawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.”Lord Moulton in Kanhaya Lal v. National Bank of India Ltd, an appeal to the Privy Council from India on a provision in pari materia with the local Act, opined that the definition of ‘coercion’ was solely a definition which applied ‘to the consideration whether there has been ‘free consent’ to an agreement so as to render it a contract’. This means that the definition of ‘coercion’ under section 15 applies solely to the consideration...
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...involved. In this article, the author tries to show 6 major mistakes which may occur in a negotiation. This article is a kind of manual to understand and have successful negotiation. The author also gives advice for a good negotiation. First and foremost, we have to understand negotiation. In many negotiation situations there are two options: Accept or refuse the deal with the other parties. A negotiator seeks to get a deal with his interests. For that, he tries to persuade others to say “yes”. However, negotiation is not an easy exercise and you have to keep into account many things in order to have the best deal. MISTAKE 1 Neglecting Other Side’s Problem: Firstly, as a negotiator, you have to prepare your negotiation and know your own interests and your own no deal options. But, an agreement requires understanding and solving the other party’s problem as a means to solving your own end. Hence, overcoming the self centered attitude is critical to a successful negotiation. Self centeredness can undercut negotiator’s ability to influence profitably how the counter party perceives its problems. It is important to understand in depth what the other side really wants out of the deal. For the negotiation to be a win-win situation for both the parties, it is essential to understand the counterparty’s dilemma. Then, together it would be possible to build a ‘‘golden bridge’’ which would span the distance between where the other party is now and your desired outcome. Successful negotiators...
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...LECTURE 11 MISTAKE INTRODUCTION We are here concerned with the consequences, if any, upon a contract where one or both of the parties to it have entered into the contract under the influence of a mistake. Sometimes these mistakes are due to some misrepresentation or misleading conduct on the part of one of the parties. In such cases there will usually be remedies based upon other principles such as misrepresentation and misleading and deceptive conduct. We are not concerned here with such mistakes. Our concern is with mistakes that might be termed as ‘self-induced or spontaneous’: Heffey et al, Principles of Contract Law, at 441. TYPES OF MISTAKE Broadly, there are four types of mistake which could have an effect on the enforceability and validity of a contract: (a) (b) (c) (d) Common mistake; Mutual mistake; Unilateral mistake; Non est factum. COMMON MISTAKE If the parties have reached agreement but have made the same mistake as to a fundamental fact, they have made what is often called a common mistake. The validity of the contract depends upon the type of common mistake made. Where the subject matter of the contract has been destroyed or does not exist at the time of the contract and neither party knows this, or is at fault, then the contract is void ab initio. See also s. 11 of the Sale of Goods Act. A different position applies if in fact the goods never existed. See McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; Associated Japanese Bank (International)...
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...1 (a) • Both parties had the intention to enter into a contract. The intention does not need to be expressed in writing – it can be inferred from one party’s words or actions. • All contracts must include an offer and its acceptance. So I have received 3 quotes from 3 plumbers for work of a large house I am building under a contract with the owner. • A contract is formed with my acceptance of the offer. If any new terms or conditions introduced not covered in the offer will be a counter-offer. There is also a postal acceptance rule that the contract is complete once the plumber places the acceptance in the mail. Acceptance may be spoken, written or inferred from conduct. I have accepted plumber A’s price by telephone and without written confirmation, but I made a note in my files that I have done so. Plumber A reinforced/acknowledge this agreement by starting work on site. So there can be no argument that there is no contract. • Valuable consideration is the element that shows the parties intend to be bound by their agreement. There is a valuable consideration as I agreed on the price Plumber A submitted. Consideration can be regarded as the ‘price of a promise’, but consideration must be something of value and may take various forms as stated in Currie v. Misa (1875). • Capacity of the parties is that the enforcement of a contract depends on the parties possessing recognised and legal capacity. Their ability to contract must be free of particular limitations. Examples...
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...1. When will the courts allow a unilateral （单方）mistake of fact to impair the enforceability of a contract? Courts will generally allow a unilateral mistake of fact to impair the enforceability of a contract if the nonmistaken party has caused the mistake or knew or should have known or should have known of the other party’s mistake, and the mistaken party exercised ordinary care. 2. What types of mutual mistakes do not make a contract defective? Mistake as to value, quality, or price; mistake as to the terms of the contract; mistake as to the law, mistake as to expectations. 3. Explain the difference between fraud in the factum and fraud in the inducement? Fraud in the factum: defrauded party did not intended to enter into a contract; the defrauded party may also be tricked into signing a contract under circumstances in which the nature of the writing could not be understood. Fraud in the inducement: defrauded party intended to make a contract; it involves a false statement regarding the terms or obligations of the transaction between the parties and not the nature of the document signed. 4. When can a statement of opinion constitute fraud? Statements of opinion, as contrasted with statements of fact, do not, as a rule, constitute fraud. 5. If an agreement is void, what must a party do to set it aside? Neither party may enforce it so no special act is required for setting the agreement aside. 6. In what ways are usurious contracts...
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... 1. Can Big Bank’s president rescind the contract? Under what circumstances can a contract be rescinded by either party? What facts have to be alleged and proven? What is the result of a contract that is rescinded? 2. Big Bank’s president also threatens legal action. What potential causes of action could you foresee him bringing in court? Would he be successful? Why or why not? What arguments could Systems Inc. raise in its defense? What are Big Bank’s potential damages? 3. Review the facts provided and the sample contract. What provisions of the contract could you cite to support an argument that it is not in Big Banks best interest to rescind the contract? What facts could you cite to support an argument that Big Bank be responsible for some of these issues and/or not in compliance with the contract? 4. In this situation, amicable resolution of problems is greatly preferred by your company. Would this be true in all contract disputes? In what situations and why would you decide to move to litigation over amicable resolution? 5. There are three types of contract performance: complete, substantial, and material breach. Describe the differences (and similarities) among the three, and explain some of the legal ramifications for one or more of these types of performances. (e.g., what happens if one party performs completely but the other party performs only substantially?) Give examples from outside readings or experiences in your career or personal business...
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...contract a legal binding agreement between two parties. The Theory to practice case is between Mr. Chou and BBT. Mr. Chou agreed soul distributorship on a 90-day contract agreement in return that BBT paid a sum for Mr. Chou’s product. Agreement, mutual assent, consideration, and capacity legality made up the two parties entrance into the contract. As in the case of BBT and Mr. Chou all contracts have differences to how they are perceived, what makes them legal in oral and written form that can either be remedied or voided by various laws and regulations. Questions 1-6 1. At what point, if ever, did the parties have a contract? The parties had an agreement when all the elemental requirements were formed in the original agreement between price, distribution, payment and terms were agreed upon. Approvals of the terms are supported by Consideration, capacity, and performance. 2. What facts may weigh in favor of or against Chou in terms of the parties’ objective intent to contract? The facts would weigh in favor of Chou because of the language and actions of intent to contract were reasonably certain. The offeror and offerre both had serious intentions to be legally bound by the terms of the contract. 3. Does the fact that the parties were communicating by e-mail have any impact on your analysis in Questions 1 and 2 (above)? Yes, the communicating emails are considered a form of written contract, since both parties transpired the terms of the new contract. The...
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...of rescinding a sales contract in a situation where both parties were unaware of an associated fact in a transaction will be addressed. The scenario that was presented to the class, the prospective car buyer Josh Hartly, was interested in purchasing a new car from a local car dealer. While in the negotiating phase of the car buying process, Mr. Hartly informed the salesperson that he was looking to purchase a certain vehicle with a 3.2 liter V-6 engine and not the 3.9 liter model that was available, as he felt that the 3.2 liter engine would be more economical. Mr. Hartly signed a purchase contract for the vehicle with the 3.2 liter V-6 engine. Unbeknownst to either the salesperson or the buyer the manufacturer of the vehicle stopped manufacturing both the 3.2 liter and the 3.9 liter models and started equipping the car with a newly designed 3.5 liter engine. This paper will cover some of the impact of the above “mutual mistake” from the right of rescission, ethics, and UCC influence. ANALYSIS In the analysis that follows the questions that were posed to the class through the assignment will be covered more thoroughly below. Should parties to a sales contract be able to rescind a contract because of mutual mistake of fact? As you read through the information provided in the scenario you can see that there is an implied mutual mistake that has taken place. According to Twomey & Jennings (2014), “When both parties enter into a contract under a mutually mistaken understanding...
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...I think this an unfortunate situation because a contract was entered into by both parties under false assumptions. A mutual mistake of material fact was made. From the information provided it does not seem it was done intentionally by the sales person so the contract can be rescinded. If the buyer, Josh Hartly, agrees to purchase a car with the new engine that is being manufactured then both parties can continue with the sales contract. One thing to be aware of would be the price difference, if any, between the 3.2 L V-6 engine car and the 3.5 L V-6 engine car. Under certain circumstances, nondisclosure serves to make a contract voidable. As a general rule a party to contract has no duty to volunteer information to the other party. So if information was not asked for the nondisclosure of said information does not impose fraud liability or impair the validity of the contract. There are however exceptions to the general rule. In some states the seller must disclose the information of a serious defect or condition to the other party if it is unknown to them or unlikely they will discover it. But if the seller has no knowledge of the serious defect or condition, they cannot be held liable for failing to disclose it (Jennings & Twomey, 2014). With the information provided, I do not believe that either party acted unethically. The sales person was not aware of the change made by the manufacturer. Though I believe it is the job of the sales person to be up to date on the products he...
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