CHPT 8 2275.pdf

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Western University
Management and Organizational Studies
Management and Organizational Studies 2275A/B
Terry Biggs

Business Law Chapter 8 Mistake – one or both parties make a mistake. Have a problem with consensus. The courts may find the contract void, voidable, rescission, or one party should sue in tort. 1 party mistake (unilateral) 1) General rule: caveat emptor (you are responsible for what you contracted for) – no remedy 2) Exception: If mistake as to identity  remedy – contract VOID 3) If mistake as to nature of document  remedy – contract VOID. “non est factum” – not what I meant to do (most of time, there is no remedy – you are responsible for what you sign) Misrepresentation – false statement of fact that induces someone to enter into a contract 1. Fraudulent misrepresentation – a lie  remedy – rescission – put parties back into original position (could be a remedy unless the victim affirms it – the victim drives the car for 6 months, the victim used it for benefit, the victim sells it, the victim isn’t quite so innocent, etc. or it is impossible to be restored) + tort action (you owed me a duty to tell me the truth, you fell below standard of care – might even request for punitive damages) 2. Negligent misrepresentation – careless  remedy- rescission or tort action (likely not going to get any punitive damages, likely only tort of negligence) 3. Innocent misrepresentation – you weren’t even careless, you did everything you could – no maliciousness  remedy is rescission if available (no tort remedy because you never fellow below standard of care) 2 parties making mistake 1. Shared mistake- both making same mistake before the agreement and they are both wrong (both in agreement and both wrong). a. If the mistake made is fundamental to the contract  remedy – contract VOID. b. If mistake as to value (how much the thing is worth)  no remedy. c. Document wrong – Remedy  rectification (correct the typo in the contract). Not usually a
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