Class Notes (837,446)
Canada (510,273)
MGSC30H3 (54)
J.Rybak (11)

Chapter 11 Mistake 1.docx

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Management (MGS)

Chapter 11 Introduction Mistake  Mistake: a state of affairs in which a party (or both parties) has formed a mistaken opinion as to the identity or existence of the subject matter, or of some other important term o If consideration is clearly out of line and the mistake is obvious, the courts may not allow the other party to “snap up” the bargain o When mistake is due to the party’s’ own negligence, the contract may be binding Mistake of Law  Mistake could take the form of a mistake of law  Recovery was only possible if the statute provided for recovery of the money paid, or there was some other conditions related to the mistake that permitted the court to direct the repayment of the money Mistake of Fact  Mistake of Fact: mistake as to the existence of the subject matter of a contract or the identity of a party  Contract is void due to a mistake as to the existence of the subject matter  If the identity of the party is not an essential element of the agreement, then the agreement may be enforceable.  If one party to the contract does not wish to be bound in an agreement with a particular contracting party, and is misled into believing that they are contracting with someone else, the contract may be voidable when the true facts are discovered. Non Est Factum  Mistake may occur when one party may be mistaken as to the true nature of a written contract o Person signing the document must have been led to believe that the document was completely difference that what it actually is  To avoid liability a person must be in a position to establish that the document was completely different in nature from the document described  Non est factum: a defence that may allow illiterate or infirm persons to avoid liability on a written agreement if they can establish that they were not aware of the true nature of the document, and were not careless in its execution o Cannot use this defense if they were careless in signing the document o The document must be completely different in the nature for this defence to work, not just differing to some degree Unilateral and Mutual Mistake  Unilateral Mistake: A mistake by one party to the agreement  Mutual Mistake: A mistake where both parties have made mistaken assumptions as to the subject matter of the agreement  Contracts unenforceable when a party makes or accepts an offer that they know the other party thinks to be materially different from what they accept  Unilateral mistake can occur when a seller offering to sell a particular product to a buyer, knows that the buyer believes the offered product is something different from what it is o Buyer may be permitted to rescind the agreement  Mutual mistake is a mistake to the existence of the subject matter or identity  Rectification: the correction of a mistake in an agreement that would have rendered the agreement impossible to perform o saves the original agreement o must convince the court through evidence that the original agreement was clear and unequivocal with regard to the term that was later changed when reduced to writing Misrepresentation  misrepresentation is a statement or conduct that may be either innocent or fraudulent and that induces a person to enter into a contract  small group of contractual relationships when the failure to disclose all material facts may amount to misrepresentation  misrepresentation will only render the agreement voidable at the option of the misled party o the continued acceptance of benefits may be interpreted as a waiver of the
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