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Ex stating a price that is absurdly high or low or quite unrelated to the range expressed during negotiationsMistake about terms – errors in recording an agreementParty may want to continue to be bound by a contract that contains incorrect terms- Ex. An oral agreement is made and when reduced to writing contains an incorrect term.Common/ Mutual mistake: a situation in which the parties (both) believe the same misunderstanding or mistake about the contract.Rectification: correction of a written document to reflect accurately the contract made bythe partiesThe parties may ask the court to correct or rectify an error in a recorded agreement- Easy for common mistakes – both parties want the same thingTEST: must demonstrate that” the parties were in complete agreement upon the terms of their contract,but by an error wrote them down wrongly.”A court may grant rectification of a unilateral mistake if the following conditions are met:1. Complete agreement with no ambiguity2. Parties die not engage in further negotiations regarding the contract
3. Mistake may have occurred as result of fraud4. The party seeking to uphold the contract knew or should have known about error and other party did not; and5. Enforcing agreement would be askinh to fraudNot easy to establish – rectification will not correct an error in judgement and it is not a substitute for due diligence.Mistake about terms- misunderstandings about the meaning of wordsBoth parties agree to the contract and to the words used – no accident or recording error- Right words, different interpretation of meaningParties place different meaning on the words in a contractCourt will decide the meaning of the words based on reasonable interpretation in light ofthecircumstancesWhere both parties and an equally reasonable (or unreasonable) interpretation of the words andholding one party to the other’s would be unfair- case of mutual mistake.- A situation in which both parties believe a mistake exists in the contract but their understandingof the mistake are different.Example: Raffels v. Wichelhaus – The ”Peerless” CaseMistakes about the subject matterTwo types;- Mistake about the existence of the subject matter of a contract
- Mistake about the value of the subject matter of a contractMistakes about the subject matter- mistake about the existence of the subject matter of a contractIf at the time a contract is made, the subject matter(goods) (ex. The contents of the holda ship) havebeen destroyed (unknown to either party)- case of common mistake existsIncorporated in the Sale of Goods Act- “where a contract is foe the sale of specific goods and the goods without the knowledge of theseller have perished at the time the contract is made, the contract is void.