Chapter 9 - Mistake and Misrepresentation

What are the grounds on which a contract can be set aside?

Mistake and misrepresentation.

What happens when a contract is set aside?

The parties are returned to their pre-contractual conditions.

What is the difference between a legal mistake and a general mistake?

A legal mistake involves a misunderstanding about facts or circumstances relevant to the contract, while a general mistake does not affect legal obligations.

What is a unilateral mistake?

A situation where one party is mistaken and the other party is not.

What is a mutual mistake?

A situation where both parties are mistaken, but they have not made the same mistake.

What is a common mistake?

A situation where both parties are mistaken and have made the same mistake.

What is the legal consequence of a void contract?

In the eyes of the law, it was never formed, and no rights or ownership passed to anyone.

What is a voidable contract?

A contract that can be declared void or can be corrected if possible.

What is an example of a unilateral mistake in contract terms?

A party mistakenly offers a counter-offer of $1,250 instead of the intended $2,000.

What is required for a court to rectify a contract due to errors in recording?

Both parties must acknowledge the error, and there must be evidence of a complete oral agreement free from ambiguity.

What happens if there is a misunderstanding about the meanings of words in a contract?

The contract may be rectified based on the most reasonable interpretation of the terms.

What is an example of a mutual mistake regarding the existence of subject matter?

A contract for the sale of cotton that cannot be fulfilled because the ship carrying it sank.

What is the significance of the term 'equitable relief' in contract law?

It refers to the remedy that parties may seek when a mistake has occurred, allowing for correction or compensation.

What is the role of the court when a unilateral mistake is substantial?

The court may void the contract if it is clear that one party made a significant mistake in expressing the terms.

What is the distinction between void and voidable contracts when there are only two parties?

The distinction does not matter; both parties are directly affected.

What is the implication of a mistake about the terms used in a contract?

If the mistake is clear to an objective observer, the contract may be voidable.

What must a court determine if one party refutes a common mistake?

Whether to rectify the contract or enforce it based on the terms that benefit one party.

What is a scenario illustrating a mutual mistake in a contract?

Both parties believe they are referring to different hockey games on the same date.

What is the outcome if a contract is based on a mutual mistake?

The contract may be voided due to the shared misunderstanding.

What is the legal definition of a 'mistake about the existence of subject matter'?

A situation where both parties mistakenly believe that the subject matter of the contract exists.

What is a mistake about the value of the subject matter?

It occurs when the qualities of the subject matter differ significantly from what the parties contemplated, affecting its value.

Provide an example of a mistake about the value of the subject matter.

A buyer purchasing a new car versus a five-year-old car, where the characteristics expected differ.

What does 'Caveat Emptor' mean in the context of contract law?

It means 'buyer beware,' indicating that the buyer is responsible for checking the quality of the goods.

How does a misrepresentation affect a contract?

A misrepresentation can render the contract voidable if it is untrue and relied upon by the promisee.

What is the difference between a representation and an opinion?

A representation is a factually grounded statement, while an opinion is subjective and not necessarily factual.

What happens if a misrepresentation is incorporated into a contract?

It becomes a term of the contract, and a breach of this term can lead to broader remedies.

What recourse does a victim have if they experience innocent misrepresentation?

The contract is voidable at the victim's option, but they must renounce it promptly to avoid acceptance.

Explain the concept of misrepresentation by omission.

It occurs when a party fails to disclose important information, leading to a misunderstanding about the contract.

What is undue influence in contract law?

It arises when one party uses a position of power to influence another party to enter into a contract, making it voidable.

What must be proven to establish undue influence?

It must be shown that one party had a special skill or position that caused the other to trust them, leading to reliance on that trust.

What is duress in the context of contracts?

Duress involves actual or threatened violence or coercion that forces a person to enter into a contract, making it voidable.

What is the legal consequence of a contract entered under duress?

The contract is voidable at the option of the victim.

What is an example of misrepresentation in a sales scenario?

A financial planner states their revenue is $1,000,000, but it has declined to an average of $500,000 over three years.

What is the significance of an 'Entire Agreement Clause' in contracts?

It states that no representations outside those in the contract are binding, limiting liability for statements made by salespeople.

What happens if a buyer learns that a purchased item is not as represented?

The buyer may have grounds to void the contract if the misrepresentation significantly affects the value of the item.

In the scenario where a painting is misrepresented as a Picasso, what is the outcome?

The contract is voidable due to the mistake about the painting's quality affecting its value.

What is the role of silence in misrepresentation?

Silence can constitute a misrepresentation if there is a duty to disclose information that affects the contract.

What is the impact of a buyer's acquiescence in a misrepresentation case?

If the buyer does not renounce the contract promptly, their acceptance may be implied, affecting their rights.

What is a common example of a relationship that may lead to undue influence?

Doctor and patient, where the patient may rely on the doctor's expertise in making decisions.

What must a party do if they wish to void a contract due to misrepresentation?

They must act promptly to renounce the contract to avoid being seen as accepting it.