Introduction
In the Law of Contract the phrase “mistake” & “Misrepresentation” is applied when one or both parties of a contract act under a false or mistaken understanding.
Mistake can be defined by Pendleton , Vickery (1998), [1] as; ➢ A misunderstanding regarding a fact, causing one or more parties to hold disagreeing beliefs about the foundation of a contract.
Mistakes can be made in the form of a contracts subject matter or as a mistake of identity. There are 3 different types of mistake in Contract Law. ➢ Common Mistake (Subject) ➢ Mutual Mistake (Subject) ➢ Unilateral Mistake (Identity)
Common Mistake
Were both parities are in an agreement however they are both mistaken about an important subject to the existence of
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➢ Voidable
On the other hand if the contract is deemed voidable due to misrepresentation the contract still exists and the good title is passed from the first party to the crook who then passes the good title on the an innocent third party (as long as the innocent third party paid a reasonable price for the goods, if they did not pay a reasonable price the court will find they did not have good faith and the contract is therefore void). In a case like this the only thing the plaintiff can do is find the crook and sue him for the amount lost.
There are two ways a court will decide if the contract is made void for mistake or not. If the contract was made face to face or at a distance (eg. on the phone or by letter) ➢ At a distance
This was first applied in the case Cundy v Lindsay (1878)[10] where a crook had pretended to be a regular customer of the company and ordered a substantial amount of goods. Once in possession of the goods he sold them on to an innocent third party who bought them at a reasonable price (good faith). The company then took action against the innocent third party under the grounds of mistake. It was held in this case that the plaintiff was mistaken as to the identity of the crook and the contract was made void, on the grounds that the plaintiff thought they
The mistake occurred. Mary McDonald entered into an agreement in such a way that the
Negligent misstatement is when ‘a false statement of fact is made honestly but carelessly’ (REFERENCE). When it comes to this area of law, courts do not like to award duty of care when there is pure economic loss. This was evident in the case of Candler Vs. Crane (1951) where they held, in reference to Lord Atkin’s neighbour principle (Donoghue Vs. Stevenson, 1932), that there are limited factors that permit duty of care and that it must meet two requirements of there being: reasonable foresight of harm and a relationship of proximity. The court also realised here, that if there
Mistake is a defense whenever the mistake prevents the formation of any fault-based mental attitude; Namely, Puposedly, Knowingly, Recklessly, or Nigliently. Mistakes are sometimes called a failure-of-proof defense because defendants usually present enough evidence to raise reasonable doubt that the prosecution has proved that they formed the mens era required for criminal liability.
Both parties must be bound.” Both parties must be required to perform under the contract, “in other words, it must be enforceable originally, or not at all.” Sayres v. Wheatland Group, L.L.C., 79 Va. Cir. 504 (Va. Cir. Ct. 2009). As stated by The Circuit Court of Fairfax County, Virginia "if it appears that one party was never bound on its part to do the acts which form the consideration for the promise of the other, there is a lack of mutuality of obligation and the other party is not bound." Busman v. Beeren & Barry Invs., LLC, 69 Va. Cir. 375 (Va. Cir. Ct. 2005).
40. Principle of Law: In this case, Esposito hired Excel Construction Company to repair a porch roof. All terms of the agreement were specified in a written contract. And the dispute occurred when Excel had repaired the rear porch roof because in the agreement failed to specify whether it was the front or rear porch that needed repair. Under civil law, two parties here had signed a civil contract in writing. Because the contract failed to specify clearly front or rear porch roof, Excel completed its obligation and didn’t break the contract.
Have you ever been done wrong? Have you ever been done wrong under a contract and faced sufficient damages causing a loss? Chapter 18 focuses on contract remedies, and how damages to a party are compensated. When a party breaches a contract, under the law the court can give the injured party an equivalent of what the promised performance would have rewarded. The two cases I chose to discuss are the Arrowhead School District No. 75, Park County, Montana v. James A. Klyap, Jr. case and the Parker v. Twentieth Century-Fox Film Corp. case. Both of these cases provide us with a very good explanation of different types of damages, and how the court came to a conclusion based off of the different scenarios. Throughout the remainder of this article, it will briefly discuss the details of each case, the similarities and differences among them, and how your business clients can use these cases to strategically prevent future legal issues of similar nature.
A dealer sold a new car to Raymond Smith. The sales contract contained language expressly disclaiming liability for personal injuries caused as a result of defects in the car and limiting the remedy for breach of warranty to repair or replacement of the defective part. One month after purchasing the auto, Smith was seriously injured when the car veered off the road and into a ditch as a result of a defect in the steering mechanism of the car.
It was decided that if the “representor gave information-or advice which was negligent he would be liable for any pecuniary or personal damage-caused”5. However the appeal was dismissed due to the fact that with “the absence of a contract or fiduciary relationship” the defendant that used a disclaimer would owe no duty of care.6 The case was significant in that claims on negligent misstatement could work if; there is a special affiliation among parties, the information provided by a party has a voluntary assumed risk, the plaintiff has to deem the information reliable, and finally the reliability of the information must be applicable.
The plaintiff, during the signing of the contract, acted in a fraudulent manner. He took advantage of the defendant’s excitement to offer the product at exorbitant amounts. He did not clearly explain to them what the terms they had agreed to implied. Courts have not shied away from invalidating contracts when it becomes apparent that one party benefitted unfairly at the end of the stipulated term. This position was held in the case of Derby v. Derby. In this case, the court argued that Mrs. Derby had used fraudulent means to ensure that Mr. Derby signed the legal documents that conveyed the property to her. Mrs. Derby had failed to explain to Mr. Derby what the documents represented, and their effect. Also, Mr. Derby had acted on misinformed belief that Mrs. Derby would return home if he (Mr. Derby signed the documents. The court ruled for Mr. Derby. This is a similar situation that the defendants, in this case, find them in. The plaintiff, while presenting the contract to them to sign, failed to explain to them the effect (Roos, 2012). Because the effect brought about gross disparity, the contract qualifies to be termed as being
The rule that courts will imply a term that was overlooked when the contract was being made, as it was so obvious
A mistaken supposition is a certainty that both you and the other party accepted to be valid at the time the agreement was agreed upon. In any case, because of whatever condition, this is no more genuine. Therefore, you can no more perform the agreement as you initially proposed. For instance, contracting dig a hole in someone’s backyard and finding later that just below ground level exists strong rock.
Cases under unilateral mistake can be divided into three categories: Firstly mistaken identity, secondly mistake as to the terms of a contract and thirdly mistake as to the nature of a document signed. The main focus in this discussion is mistaken identity, where one party is mistaken as to the identity of another. Mistaken identity may happen in two different
If parties enter into a contract that is reflective or derives from a mistake, under common law the contract may be void or voidable. The basis of this decision depends on the type of mistake. Shogun Finance Ltd v Hudson presented a unilateral mistake, in which only one party is mistaken, and in this case, a mistake as to the identity. The difficulty lies when judges must decide whether a contract is void or voidable, which will only protect one of the two arguably innocent parties, the original property owner or the bona fide purchaser. However, the approaches previously taken by the Courts have led to a lack of certainty and coherence in the interests of commercial transactions, and so the Shogun case presented an opportunity for clarification. I am going to raise the argument that the law of mistake is in need of a reform, by following Lord Millett’s proposal to no longer follow the cases Cundy v Lindsay and Ingram v Little. The reasoning within this argument will establish that the cases are inconsistent, lack support for third parties and fail to establish the authority of creditworthiness over identity in commercial contracts. Alternatively, the cases Phillips v Brooks and Lewis v Averay should be used to create a clear established line of case law which can be seen as a fair and practical approach towards mistake and protecting the bona fide purchaser.
When contracts are broken and a party of the agreement decides to begin process of suing the other party of the contract, courts will be involved. When courts get involved, a contract is interpreted a certain way. When oral contracts are taken to court, the judge will take in information from both parties since their is no paper trail of what was agreed