Test 3 Review - Test 3 Review 1 The law permits rescission...

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Test 3 Review 1. The law permits rescission of some contract made in mistake. A unilateral mistake occurs when only one party is mistaken about a material fact regarding the subject matter of the contract. 2. There are 3 is situations where the mistaken party can rescind a contract in a unilateral mistake. a. One party makes a unilateral mistake of fact and the other party knew (or should have known) that a mistake was made. b. A unilateral mistake occurs because of a clerical or mathematical error that is not the result of gross negligence. c. The mistake is so serious that enforcing the contract would be unconscionable. 3. A mutual mistake of fact is a mistake made by both parties; either party may rescind a contract if there is a mutual mistake of fact. If there has been mutual mistake, the contract may be rescinded on the ground that no contract has been formed because there has been “no meeting of the minds” between the parties. 4. This can be considered a mutual mistake of value , in which a mistake occurs if both parties know the object of the contract but are mistake as to its value. The person who sold the desk cannot recover it. 5. The case of the two ships named “Peerless” is a case of mutual mistake of fact . The court ruled that there was no binding contract because each party had a different ship in mind when the contact was entered into. Never had a “meeting of the minds.” 6. This would be considered material misrepresentation of fact because there has been fraud in the inducement . 7. If a party was given a document to sign and told it was one type of document, but in reality was a different legal document. Fraud in the inducement occurs if a person knows what they are signing but has been fraudulently induced to enter into the contract. 8. A plaintiff in a fraud case must prove 4 elements: a. The wrongdoer made a false representation of material fact. b. The wrongdoer intended to deceive the innocent party. c. The innocent party justifiably relied of the misrepresentation. d. The innocent party was injured.
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9. To be grounds for fraud a, misrepresentation must relate, to when an assertion is made that is not in accord with the facts. 10. This could be a form of innocent misrepresentation , which is fraud that occurs when a person makes a statement of fact they honestly and reasonably believes to be true even though it is not. But this can also be treated as a mutual mistake. Jill cannot hold Jack to the contract. 11. The seller of the jewelry cannot rescind this contract because it is considered a mutual mistake of value and the seller cannot recover the jewelry. 12. Mark cannot do anything he is still responsible for the contract, this is a
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This note was uploaded on 07/25/2011 for the course BUSI 2301 taught by Professor Qui during the Winter '10 term at San Jacinto.

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Test 3 Review - Test 3 Review 1 The law permits rescission...

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