Mistake Flashcards
(17 cards)
What is the effect of an operative mistake in contract law?
It renders the contract void ab initio (from the outset), meaning the contract is treated as if it never existed.
How does a void contract differ from a voidable contract?
A void contract has no legal effect from the outset. A voidable contract is valid until it is set aside.
What is an operative mistake?
A mistake recognised in law as preventing a contract from taking legal effect.
What is a common mistake?
When both parties make the same mistake about a fundamental fact at the time of the contract.
What is an example of a common mistake?
Both parties agree to sell goods that have unknowingly been destroyed before the contract (e.g. a shipment of corn lost at sea).
When will a common mistake render a contract void?
Only if the mistake is sufficiently fundamental – e.g., subject matter does not exist, or performance is impossible.
When will common mistake not apply?
If the mistake is not fundamental
If one party is at fault
If the contract allocates the risk
What is a mutual mistake?
When both parties are mistaken about different things, negotiating at cross-purposes.
What is the legal result of a mutual mistake?
The contract is void if genuine agreement is absent.
What test do courts use to determine mutual mistake?
An objective test: what would a reasonable person infer from the parties’ words and conduct?
What is an example of mutual mistake?
A offers to sell a chestnut horse, B thinks he’s buying a grey horse – neither specifies the colour.
What is a unilateral mistake?
When only one party is mistaken, and the other knows or is deemed to know of the mistake.
What are the key types of unilateral mistake?
Mistake as to the expression of intention
Mistake as to the nature of the document
Mistake as to the identity of the other party
What is the general rule about signing contracts you haven’t read?
You are bound by what you sign
What is the exception to this rule?
If the signer is illiterate, blind, or misled, they may plead non est factum – “this is not my deed”.
What is a unilateral mistake as to identity?
When one party believes they are contracting with a particular person, but the other party pretends to be that person.
What is the significance of whether a contract is void or voidable in these cases?
If void, no title passes to fraudster or third party (seller can reclaim goods).
If voidable, title passes until rescinded – good faith third party gets good title
