Chapter 8 - Business Law 2275

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2275A/B
Professor
Cristin Keller
Semester
Winter

Description
Chapter 8Factors Affecting the Contractual RelationshipMistakeMisunderstanding that destroys consensus results in void contractCourts will not interfere when the parties have simply made a bad bargainReviewable mistakes in contract a persons mind being at odds with the terms surrounding circumstances or other factors relating to the contract including the identity of the partiesCan relate to an assumption upon which the contract is based fact future event or law or an expected result or consequenceShared mistake both parties making the same mistake or misunderstandingMistake must be seriousIf mistake relates to the agreement itself identity or subject matter courts are more willing to provide a remedy and if a mistake is caused by negligence of one of the parties that party will normally be held responsible for the errorMistake about the facts involved courts more likely to provide a remedyUnjust enrichmentone party stands to make a windfall at the expense of the other the courts likely will review the transaction Ex when one party receives payment they are not entitled to because the other has misunderstood his legal obligationFundamental shared mistake about subject matter makes contract voidVoidit is not a contract at all contract does not exist and third parties must return what they was given to them to the original owner put back into original stateVoidablecontract does exist but one of the parties has the option of getting out of it and third parties dont need to return what was given to them they can keep themShared MistakeTwo parties are in complete agreement but they have both made the same mistake regarding some aspect of the contract courts will review if mistake relates to some fundamental aspectEx the subject matter of the contract no longer exists at the time the contract is made which results in a void contract void for a lack of consensusIf the shared mistake relates only to the value of what they are dealing with it normally will not affect the enforceability of the contractRectification o If the written document does not reflect the common intention of the parties to the contract the courts are willing to correct or rectify the document Ex contract says 10 instead of 1000MisunderstandingCourt will enforce reasonable interpretationIf the error is a serious one and the court cannot choose between the two positions because both are equally reasonable will the contract be declared voidOneSided MistakeOnesided or unilateral mistake takes place where only one of the parties to the contract is making a mistake with respect to the contractGeneral ruleno recourse for a person who makes such a onesided mistake likely will be no remedyCaveat emptorLet the buyer beware misled themselvesIf offeror makes an obvious mistake in relation to his or her offer the purchaser will not be allowed to take advantage of this obvious error and snap up the offerPerson making mistake usually has a remedy only when he or she has been myself or if it is extremely fundamental it will be voidIf mistake goes to identity not just an attribute of an identity it is a void contractNon est factum
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