Chapter 14 Outline

Chapter 14 Outline - Chapter 14 Mistakes Fraud and...

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Chapter 14: Mistakes, Fraud, and Voluntary Consent 1) Mistakes of Fact: occur in two forms – bilateral and unilateral a) Bilateral Mistake – made by both of the contracting parties; occurs when both parties are mistaken as to an existing material fact – a fact important to the subject matter of the contract i) The contract is normally voidable by the adversely affected party and can be rescinded ii) A word or term in a contract may be subject to more than one reasonable interpretation. If the parties to the contract attach materially different meanings to the term, a court may allow the contract to be rescinded because there has been no true meaning of the minds. b) Unilateral Mistake – occurs when only one of the contracting parties is mistaken about a material fact i) Generally, does not afford the mistaken party any right to relief from the contract. ii) Two exceptions: (1) If the other party to the contract knows or should have known that a mistake of fact was made, the contract may not be enforceable. (2) If due to a mathematical mistake in addition, subtraction, division, or multiplication and was made inadvertently and without gross negligence. (a) The clerical error must be readily provable, though. 2) Mistakes of Value a) If a mistake concerns the future market value or quality of the object of the contract, the mistake is one of value and the contract normally is enforceable. b) Can be bilateral or unilateral c) Does not serve as a basis for avoiding a contract since the value is variable. i)
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Chapter 14 Outline - Chapter 14 Mistakes Fraud and...

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