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About Mistake.doc

5 Pages

Administrative Studies
Course Code
ADMS 2610
Jack Furman

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UNDERSTANDING THE CONCEPT OF MISTAKEAny attempt to understand the concept of Mistake in contract law is made quite difficult by both text writers and a reading of decided casesThis is because both sometimes talk about there being a contract but one party wants it set aside suggesting a contract exists and is voidable and at other times they talk about a problem with the subject matter of the contract which has the effect of creating no contract at all so the contract is voidIn the first situation the suggestion is that a contract exists but it will be set aside by reason of mistake making it voidable while in the second situation what they are trying to say is that because there was some problem or mistake concerning the subject matter of the contract there never was a contract at all and thus the contract is void ab initio or from the outset or start The result is that it appears that there is no consensus or agreement on what mistake actually isHowever if you read the case law carefully what becomes apparent is that with the exception of Public Policy or a specific statute which rendersmakes a contract void the only time a contract is void from the beginning is by reason of one type of Mistake which will be discussed below Thus for your purposes whenever you encounter Mistake you can consider the contractor voidvoidable depending on the nature of the mistakeTHE TYPES OF MISTAKEMUTUAL MISTAKEThe first type of mistake is what is often called a Common or Mutual Mistake that is a mistake made by both parties to the contract usually having to do with the subject matter of the contract or the consideration for itIn such a situation you can consider the contract voidConsider the following examples1A and B are negotiating the sale by A to B of As stamp collectionBoth A and B believe that it is an ordinary stamp collection with a value somewhere around500000 so they agree on a price of470000 while unknown to either of them the collection contains a stamp worth10000000 making the stamp collection really worth 10500000Here A would be able to set aside the contract because there really was no contract at allThat is both parties were mistaken as to the true naturevalue of the collection or in other words both parties were mistaken as to the subject matter of the contract and thus the contract is void2A and B are negotiating the purchase by B of shares in a companyA says to B What will you give me for 75 shares of Eastern Cafeterias of Canada and B replies I shall look into it and let you knowAfter making some inquiries B telephones A back and says I will give you1050 a share for your Eastern Cafeterias and A repliesI accept your offerLater B says that he made a mistake and meant to buy shares of a company called Eastern Cafeterias LimitedWhat B is trying to argue is that he and A were never in agreement about the company whose shares A was selling and B was buyingA court however
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