Excuse Doctrines

Question 1

How many avoidance doctrines are there?

Answer 1

Nine.

Question 2

What are the nine avoidance doctrines?

Answer 2

Mistake
Fraud
Duress
Undue Influence
Illegality
Incapacity
Unconscionability
Impossibility
Frustration of purpose

Question 3

What is the difference between a void contract and a voidable contract?

Answer 3

Void: No assent and no contract ever existed.

Voidable: Valid contract but party with the power of avoidance can exercise the power to avoid it.

Question 4

Define “mistake.”

Answer 4

A belief that is not in accord with the facts at the time of contracting with respect to a basic (material) assumption on which the contract was made.

Question 5

Regarding the effect of a misunderstanding, there is no mutual assent if:
1. ?
And
2. ?

Answer 5

1. Parties attach materially different meanings to manifestations, and
2. Neither knows/has reason to know of the other’s meaning or both know/have reason to know the other’s meaning.

If there is mutual assent, go with the non-knowing party’s meaning if the other knows/has reason to know of the mistake.

Question 6

How does Restatement 152 handle when mistake of both parties makes a contract voidable?

Answer 6

Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in Restatement 154.

Question 7

What seven questions must be asked in a mutual mistake/misunderstanding analysis?

Answer 7

1. What is the type of mistake?
2. Are both parties mistaken about the same thing?
3. Has there been a mistake of fact?
4. Does it go to a basic assumption of the contract?
5. Does it have a material effect on the agreed exchange?
6. Did the party seeking relief assume the risk of the mistake?
7. Does one party know the other party is attaching materially different meanings?

Question 8

What are the three types of mutual mistake?

Answer 8

1. Existence or identity of subject matter
2. Value of the subject matter
3. Operation of the subject matter

Question 9

What is the result of a mistake in the existence or identity of subject matter?

Answer 9

The contract is set aside and nobody assumed risk.

Question 10

What is the result of a mistake in the value of subject matter?

Answer 10

The contract is not set aside and risk is assumed.

Question 11

What is the result of a mistake in the operation of subject matter?

Answer 11

The contract is set aside and nobody assumed risk.

Question 12

What is meant by mistake of fact?

Answer 12

The belief is not in accord with the facts or is an erroneous belief of facts at the time of contracting.

Question 13

Is the basic assumption of a contract important?

Answer 13

It is fundamental/foundational to the contract or the efficient cause of the contract.

Question 14

Is a material effect on the agreed exchange important?

Answer 14

A reasonable person would consider the effect of the mistake significant in making the contract. But-for the mistake, the complainant would not have assumed the obligation.

Question 15

When does a party seeking relief bear the risk of a mistake?

Answer 15

1. Through allocation by agreement of the parties, or
2. When he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or
3. Through court allocation on the ground it is reasonable in the circumstances to do so.

Question 16

What happens when both parties have the same knowledge regarding facts (parties are equally innocent or equally guilty)?

Answer 16

The contract is set aside based on the mutual mistake/misunderstanding.

Question 17

What happens when one party knows of the different meaning attached by the first party?

Answer 17

The contract is not set aside and the meaning of the innocent party is used.

Question 18

What is the general remedy for mutual mistake?

Answer 18

Rescission.

Question 19

1. What damages are usually awarded with rescission?
2. Are any other damages possible?

Answer 19

1. Restitution.
2. Reliance and consequential damages.

Question 20

What is rescission?

Answer 20

Equitable decree where the contract is canceled.

Question 21

What are the seven questions to ask in the steps of a unilateral mistake analysis?

Answer 21

1. What is the mistake type?
2. Is one party mistaken at the time the contract is made?
3. Does it go to a basic assumption of the contract?
4. Does it have a material effect on the agreed exchange?
5. Did the party seeking relief assume the risk of the mistake?
6. Would enforcement be unconscionable?
7. Does the other party know of the mistake/cause in fact?

Question 22

What are the three types of unilateral mistake?

Answer 22

1. Identity of the offeree by offeror
2. In the computations or calculations
3. In judgement

Question 23

What happens when there is a mistake in the identity of the offeree by the offeror?

Answer 23

The contract is normally set aside.

Question 24

What is the result when there is a mistake in the computations or calculations? Are there any exceptions?

Answer 24

The contract is normally not set aside. Exception: No Snapping Up Rule

Question 25

What is the “No Snapping Up” rule?

Answer 25

When it’s obvious someone made a mistake in the terms of an offer, one may not simply “snap up” the offer to be able to enforce the agreement.

If the non-erring party knew/should have known of the error, the contract is normally set aside; if not, the contract stands.

Question 26

What happens to a contract when there is a mistake in judgement?

Answer 26

The contract is not normally set aside.

Question 27

What is meant by unconscionable enforcement?

Answer 27

Enforcing the contract would cause oppression or unfair surprise.

Question 28

1. What is reformation?
2. When does it usually occur?
3. What is it a remedy for?

Answer 28

1. Equitable action where the court rewrites the contract to represent the parties/ true agreement.
2. Usually occurs when there has been a scrivener’s error (writing written down wrong).
3. Remedy for mistake, fraud duress, undue influence, and unconscionability.