Chapter 17

mutual (or bilateral) mistake

a mistake is made by both parties; if it pertains to a material (or significant) fact, either party can rescind the contract

unilateral mistake

a mistake made by one contracting party; generally, a contract is still binding even if this mistake has been made.

Legal assent

a promise to buy or sell. A court will require the parties to obey. Without this, a contract may be avoided or rescinded.

unconscionability contract

an "adhesion contract," and cannot be the basis for avoiding the contract.

Undue influence

consists of persuasive efforts of a dominant party, who uses a special relationship to interfere with the other party's free choice of contract terms. Also, any relationship involving one party's unusual degree of trust in another can result in this.

cancellation of contract

due to a lack of assent this means the party with the power of avoidance can require the return of consideration given to the other party; similarly, party with a rescission right must return the consideration received from the other party

Mistakes

erroneous beliefs regarding the material facts of a contract existing at the time the agreement was made.

obstacles of legal assent

includes mistake, misrepresentation, undue influence, duress, and unconscionability.

Unconscionability

occurs when one party has so much relative bargaining power that he or she effectively dictates the terms of contract, resulting in a situation where the dominated party, in essence, lacks free will.

Duress

occurs when one party threatens another with a wrongful act unless assent is given. This is not legal assent, since coercion interferes with the contracting party's free will.

Duress

occurs when one party threatens physical harm or extortion to gain consent to contract, when one party threatens to file a criminal lawsuit unless consent is given to the terms of the contract, when one party threatens to file a frivolous civil lawsuit unless consent is given to the terms of the contract, and when one party threatens the other's economic interests

innocent misrepresentation

occurs when the party making the false assertion believes it to be true, and is not negligent in making the false assertion. It permits the misled party to rescind the contract, but he or she cannot sue for damages.

Fraudulent misrepresentation

the intentional, untruthful assertion of a material fact by a contracting party. The aggrieved party can rescind the contract, and sue for damages.

Negligent misrepresentation

the negligent, untruthful assertion of material fact by a contracting party. The aggrieved party can rescind the contract, and sue for damages.