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Lecture 14

LAW 1101 Lecture 14: LAW1101 CLASS 14

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Baruch College
LAW 1101
Paula Walter

LAW1101 CLASS 14 Read pgs 310-311, B42, Appendix D7 and D8, problems 4,5 Chapter 13: Defenses to Contract Enforceability VOLUNTARY CONSENT Generally, a party who demonstrates that he or she did not genuinely agree to the terms of a contract can choose either to carry out the contract or to rescind it and thus avoid the entire transaction A. Mistakes • In some cases, contract law allows a contract to be avoided on the basis of mistake 1. Unilateral Mistakes a. Unilateral mistake occurs when only one party is mistaken as to a material fact—that is, a fact important to the subject matter of the contract b. Generally, a unilateral mistake does not give the mistaken party any relief from the contract c. This rule has two exceptions i. The other party to the contract knows or should have known that a mistake of fact was made ii. The error was due to a substantial mathematical mistake in addition, subtraction, division, or multiplication and was made inadvertently and without gross (extreme) negligence 2. Bilateral (mutual) Mistakes a. Bilateral mistake is a “mutual misunderstanding concerning a basic assumption on which the contract was made” b. When both parties are mistaken about the same material fact, the contract can be rescinded or canceled by either part c. The mistake must be a material fact B42—Case 13-4: Balaban-Gordon CO., INC. v. Brighton Sew. Dist. -They wanted to construct two sewage treatment plants. They place a bid on the contract. Balaban-Gordon CO. bid the lowest price. (530,300 lower than the next bidder). Balaban noticed that they had mistaken in the price of supplies/machinery. This is a unilateral mistake, generally Balaban would have lost. BUT because the sewer district SHOULD have known there was a mistake, Balaban won the case. 4. Max Corporation, a well-known television manufacturer, had several odd lots of discontinued models, which It desired to clear out. Max, the president, invited Dharun, the owner of Dharun Discount Chain, to come in and examine the different models and make Max an offer for the entire lot. The sets were segregated from t
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