...concerns regarding the fuel economy of the 3.9 liter engine. Josh signs a contract agreeing to purchase a car with the 3.2 liter V-6 engine. What neither Josh nor the salesperson knew was that the manufacturer had already stopped manufacturing both the 3.2 liter and the 3.9 liter, and was equipping the cars with a newly designed 3.5 liter engine. What do you think about this situation? Should parties to a sales contract be able to rescind a contract because of mutual mistake of fact? Why or why not? Did either party act unethically in this case? Why or why not? What application does the UCC have here? Finally, in the overall context of contract law, are there any winners or losers when a contract is rescinded based on mutual mistake of fact? Why or why not? A mutual mistake is when both parties incorrectly believe an important fact to be true or the applicable law to be relevant. The important facts that affect or influence a parties decision are called material facts, and if there is mutual misunderstanding of these facts means contract can be void therefore without legal effect. (John Adamson, 2011) After looking at the facts it seems as though its is more of an error on behalf of the salesman and for me he should rescind the contract and take responsibility for the misunderstanding as it is not the consumers duty to know what engines are being manufactured. They both agreed to a contract that was created under the assumption that the 3.2 and 3.9 V6 engines were...
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...Purchase Contract and a Mutual Mistake Sheldon Weyland Southern New Hampshire University Purchase Contract and a Mutual Mistake According to the prompt Josh Hartly and a salesperson negotiated an automobile purchase together. As part of the negotiations, Mr. Hartly, expressed concerns that a 3.9 liter V-6 would not be as fuel efficient as the 3.2 liter. After Mr. Hartly concluded negotiations with the salesperson, he signed a contract to purchase a car with a 3.2 liter V-6 engine. Following, the creation of the purchase agreement, it was discovered that the manufacturer had replaced both 3.2 liter and the 3.9 liter engines. Both engines were replaced by a newly designed 3.5 liter engine. However, neither Mr. Hartly nor the salesperson were aware of the change prior to entering into the purchase contract. This short paper will begin by examining the ability of these parties to rescind the contract due to mutual mistake. Next, the ethics and application of the Uniform Commercial Code (U.C.C.) will be further explained. Following these objectives, and in review of overall context of contract law, I will determine if any winners or losers are created when a contract is rescinded based on mutual mistake of fact. Finally, I will provide my own thoughts regarding the contract created between Mr. Hartly and the salesperson. Both Mr. Hartly and the salesperson, entered into a contract under a mutually mistaken understanding concerning on a basic assumption of fact, engine size...
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...aspects of rescinding a sales contract in a situation where both parties were unaware of an associated fact in a transaction will be addressed. The scenario that was presented to the class, the prospective car buyer Josh Hartly, was interested in purchasing a new car from a local car dealer. While in the negotiating phase of the car buying process, Mr. Hartly informed the salesperson that he was looking to purchase a certain vehicle with a 3.2 liter V-6 engine and not the 3.9 liter model that was available, as he felt that the 3.2 liter engine would be more economical. Mr. Hartly signed a purchase contract for the vehicle with the 3.2 liter V-6 engine. Unbeknownst to either the salesperson or the buyer the manufacturer of the vehicle stopped manufacturing both the 3.2 liter and the 3.9 liter models and started equipping the car with a newly designed 3.5 liter engine. This paper will cover some of the impact of the above “mutual mistake” from the right of rescission, ethics, and UCC influence. ANALYSIS In the analysis that follows the questions that were posed to the class through the assignment will be covered more thoroughly below. Should parties to a sales contract be able to rescind a contract because of mutual mistake of fact? As you read through the information provided in the scenario you can see that there is an implied mutual mistake that has taken place. According to Twomey & Jennings (2014), “When both parties enter into a contract under a mutually mistaken understanding...
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...demonstrates that he or she did not genuinely assent to the terms of a contract may avoid the contract. Genuine assent may be lacking due to mistake, fraudulent misrepresentation, undue influence, or duress. As was true with contracts entered into by persons lacking contractual capacity, contracts lacking genuine assent are voidable, not void. Ch. 14: Contracts: Genuineness of Assent - No. 1 West’s Business Law (8th ed.) MISTAKE Mistake: The parties entered into a contract with different understandings of one or more material fact(s) relating to the subject matter of the contract. Unilateral Mistake: A mistake made by one of the contracting parties. Generally, a unilateral mistake will not excuse performance of the contract unless: (1) the other party to the contract knew or should have known of the mistake; or (2) the mistake is one of mathematics only. Mutual Mistake of Fact: A mistake on the part of both contracting parties as to some material fact. In this case, either party may rescind. Mutual Mistake of Value: If, however, the mutual mistake concerns the future market value or some quality of the object of the contract, the contract can normally be enforced by either party. Ch. 14: Contracts: Genuineness of Assent - No. 2 West’s Business Law (8th ed.) FRAUDULENT MISREPRESENTATION When an innocent party consents to a contract with fraudulent terms, he or she may usually avoid the contract, because he or she did not genuinely assent to the fraudulent...
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...QUESTION 1 IF ONE OR BOTH PARTIES ENTER INTO A CONTRACT UNDER SOME MISUNDERSTANDING OR MISTAKEN ASSUMPTION, IN WHAT CIRCUMSTANCES WILL THE COURT INTERVENE TO HOLD THE CONTRACT VOID AND UNENFORCEABLE ON THE GROUNDS OF MISTAKE? In contract law, a mistake is an erroneous belief made by parties when contracting. Mistakes are not generally enforceable at the law court and are often treated as void or voidable. Mistakes are generally irrelevant, but exception to this places great emphasis on operative mistake which includes common mistake, mutual mistake and unilateral mistake. Mistakes or misunderstanding may render a contract void when the following are presents; * Mistake of the law; When a party enters into a contract, without the Knowledge of the law in the country, the contract is affected by a mistake making it unenforceable on the grounds of ignorance. Note also that the ignorance of the law is not an excuse. CASE Lydia a foreigner entered into contract with Amina in Ghana with the view that, Amina should supply heroine on a contract basis for a token of GHC 5,637,600 for every supply made. Unknowingly to Lydia that it is illegal to trade heroine in Ghana. Hence the contract is void and loses its enforceability at the law court. * Mistake of Fact; This happens where both parties enter into an agreement under a mistake as to a matter of fact essential to the agreement, the contract is declared void. For instance, ‘A’ agrees to buy a certain horse from ‘B’. It turns out...
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...Essay Title: “Factors that affect free consent in a contractual agreement under the Contract Act 1950”. 1. Coercion. Since a contract will only be binding if the parties voluntarily consent to it, it is obvious that where one party is forced to consent by threats or undue persuasion by the other, that consent should be invalid.One form of such threats is ‘coercion’ and has been defined in section 15 of the Contracts Act for the purposes of section 14 (as discussed in para 2.1) which, among others, require ‘free consent’ of contracting parties. The latter section goes on to provide that consent is free when it is not caused by ‘coercion’ as defined by section 15, or others such as ‘undue influence, fraud, misrepresentation and mistake’. The relevant part of section 15 reads as follows: “ ‘Coercion’ is the committing, or threatening to commit any act forbidden by the Penal Code, or the unlawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.”Lord Moulton in Kanhaya Lal v. National Bank of India Ltd, an appeal to the Privy Council from India on a provision in pari materia with the local Act, opined that the definition of ‘coercion’ was solely a definition which applied ‘to the consideration whether there has been ‘free consent’ to an agreement so as to render it a contract’. This means that the definition of ‘coercion’ under section 15 applies solely to the consideration...
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...Question 1: Ian brings a claim for breach of contract against Ben. Discuss whether Ian and Ben formed an enforceable contract and whether Ian is likely to succeed with his claim An enforceable contract can be described as an agreement that can be enforced by the courts. However there are certain essential elements of a valid and enforceable contract. For this purpose, it is required that one party should make an offer and the other party should accept the offer. Similarly there should be a meeting of the minds. Other requirements of a valid contract our consideration and the capacity to enter into the contract. It needs to be noted that the law of contract provides that the party making the offer can revoke the same at any time before the other party has accepted the offer (Peel, 2007). At the same time, it is also required that the offer should be accepted unequivocally by the party to whom the offer has been made. In this regard, the postal role of acceptance provides that when post has been contemplative as the means of communicating the acceptance, the contract is considered to have been completed when the party accepting the offer, places the letter containing the acceptance in the mailbox. In this way, this rule is an exception to the general rule according to which, the acceptance is treated as concluded when the party making the offer receives the acceptance. The postal role was provided in the famous case of Adams v Lindsell (1818). In the same way, this rule has also...
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...Mistake Mistake exists where parties to a contract think that they have agreed when in actual fact they have not. For a party to be able to set a contract aside on the basis of mistake he has to establish the following. The mistake should be one of fact not law, the mistake must concern a material fact and it must be a reasonable mistake. The types of mistakes in the contract of law include unilateral mistake, mutual mistake and common mistake. Bilateral/common mistake This exists where both parties are mistaken .They would be thinking that they have agreed when in actual fact there is a common mistake on either side, courts have usually allowed both parties to set such a contract aside. The academic argument which is well founded is that such a contract should be treated as void because one of the requirements that is (consensus ad idem) is missing. An error on the part of both parties of a transaction regarding the same matter, such as if two people sign a contract under a certain understanding, while the contract actually conveys a different meaning than they each may have expected. That a mistake of law does not invalidate a contract was held in Ncube V Ndlovu 1985 (2) RLR 281. The appellant seduced a major daughter of the respondent. The appellant then signed an agreement undertaking to pay the respondent damages for seduction. He wanted to avoid the contract on the basis that he was mistaken as to the law that is he did not know that a father has no right to sue for...
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...building a fence around her orchard. Jack inspects and measures Jill’s apple orchard and gives Jill an estimate of $1,000. Jill agrees to the price and they sign a contract. Jill, however, had in mind a fence around her peach orchard that is much larger. Jack says he cannot build a fence around the peach orchard for $1,000, but Jill wants to hold Jack to the $1,000 for a fence around the peach orchard, and sues Jack for breach of contract. Issue: Can Jill sue Jack for breach of contract? Rule: Breach of contract states “A failure of a party to a contract to perform his or her obligations as agreed to within the contract”. Contract law allows for judicial intervention in the event of a breach that is substantial, that goes to the root of the contract, also stated to be fundamental, by relieving the non-breaching party of his or her obligations and exposing the breaching party to damages or, if appropriate, an order for performance of the breached contractual obligation. Application: In Order for a contract to exist you have to have five elements: 1) Offer 2) Acceptance 3) Consideration 4) Legality 5) Capacity Under the common law, the offer had to be definite enough to establish the material terms of the contract. If material terms of the contract were not present in the offer, than a contract would not be found to exist. So the first element was not covered due to the fact that Jill did not mention the peach orchard and Jack just measured one orchard...
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...Below is the list of questions you should work together to answer in this thread. Feel free to come up with more to answer together if you need them. 1. Can Big Bank’s president rescind the contract? Under what circumstances can a contract be rescinded by either party? What facts have to be alleged and proven? What is the result of a contract that is rescinded? 2. Big Bank’s president also threatens legal action. What potential causes of action could you foresee him bringing in court? Would he be successful? Why or why not? What arguments could Systems Inc. raise in its defense? What are Big Bank’s potential damages? 3. Review the facts provided and the sample contract. What provisions of the contract could you cite to support an argument that it is not in Big Banks best interest to rescind the contract? What facts could you cite to support an argument that Big Bank be responsible for some of these issues and/or not in compliance with the contract? 4. In this situation, amicable resolution of problems is greatly preferred by your company. Would this be true in all contract disputes? In what situations and why would you decide to move to litigation over amicable resolution? 5. There are three types of contract performance: complete, substantial, and material breach. Describe the differences (and similarities) among the three, and explain some of the legal ramifications for one or more of these types of performances. (e.g., what happens if one party performs...
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...TITLE 2 CHAPTERS 1 Limitations on contractual stipulations * Law * Police power Classification of contracts according to its name or designation * Nominate contract * Innominate contract Kinds of innominate contract * I give that you may give * I give that you may do * I do that you may give * I do that you may do Rules governing innominate contracts * The agreement of the parties * Provisions of the Civil Code on obligations and contracts * Rules governing the most analogous contracts * Customs of the place Persons affected by the contract * General rule * Exceptions * By their nature * By stipulation * By provision of law Cases when strangers or third persons affected by a contract * Contracts containing a stipulation in favour of a third person * Contracts creating real rights * Contracts entered into to defraud creditors * Contracts which have been violated at the inducement of a third person Classes of stipulation pour autrui * Those where the stipulation is intended for the sole benefit of such person * Those where an obligation is due from the promise to the third person which the former seeks to discharge by means of such stipulation, as, for instance, where a transfer of property is coupled with the purchaser’s promise to pay a debt owing from the seller to a third person. Requisites of stipulation pour autrui * Contracting parties by their stipulation must have clearly...
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...PART II - CONTRACTS -meeting of minds bet 2 parties whereby one binds himself with respect to other to give something or render some service PRINCIPAL CHARACTERISTICS: 1. Autonomy of wills – parties may stipulate anything as long as not illegal, immoral, etc. 2. Mutuality – performance or validity binds both parties; not left to will of one of parties 3. Obligatory Force – parties are bound from perfection of contract: a. fulfill what has been expressly stipulated b. all consequences w/c may be in keeping with good faith, usage & law 4. Relativity – binding only between the parties, their assigns, heirs; strangers cannot demand enforcement EXCEPTION TO RELATIVITY: a. Accion pauliana b. Accion directa c. Stipulation pour autrui REQUISITES OF STIPULATION POUR AUTRUI (1) Parties must have clearly and deliberately conferred a favor upon a 3rd person (2) The stipulation in favor of a 3rd person should be a part of, not the whole contract (3) That the favorable stipulation should not be conditioned or compensated by any kind of obligation whatsoever (4) Neither of the contracting parties bears the legal representation or authorization of 3rd party (5) The third person communicates his acceptance before revocation by the original parties d. Art 1312 e. Art 1314 REQUISITES OF ART 1312: (1) Existence of a valid contract (2) Knowledge of the contract by a 3rd person ...
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...A mistake is a false assumption made by one or both parties in the formation of a contract and may be used as grounds to invalidate the agreement. There are three types of mistake in the law of contract. These are common mistake, mutual mistake and unilateral mistake. A common mistake is where both parties hold the same mistaken beliefs of the facts. A common mistake ca only void a contract if the mistake of the subject matter was sufficiently fundamental to render its identity different from what was contracted, making the performance of the contract impossible. There are two situations of common mistake. These are the case of res extincta and the case of res sua. In the case of res extincta, there is a common mistake asto the existence of the subject matter of the contract. For example, if A agrees to sell his car to B and unknown to both persons, the car had at the time of sale been destroyed by fire, the contract will be void because A has innocently undertaken an obligation which he cannot possibly fulfill. The following case is an application of res extincta. In the case of Couturier v Hastie, Hastie dispatched a cargo of corn from Salonica and sent the chaterparty a bill of lading to their London agents so that the corn might be sold. The London agents employed Couturier to sell the corn and a person named Callander bought it. Unknown to the parties the cargo had become overheated and had been landed at the nearest port and sold, so that when the contract was...
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...Practice Susan Towers 421 April 21st 2014 Roseali Drawbaough Theory to Practice When entering into a contract, it is important to note the elements of what makes a contract a legal binding agreement between two parties. The Theory to practice case is between Mr. Chou and BBT. Mr. Chou agreed soul distributorship on a 90-day contract agreement in return that BBT paid a sum for Mr. Chou’s product. Agreement, mutual assent, consideration, and capacity legality made up the two parties entrance into the contract. As in the case of BBT and Mr. Chou all contracts have differences to how they are perceived, what makes them legal in oral and written form that can either be remedied or voided by various laws and regulations. Questions 1-6 1. At what point, if ever, did the parties have a contract? The parties had an agreement when all the elemental requirements were formed in the original agreement between price, distribution, payment and terms were agreed upon. Approvals of the terms are supported by Consideration, capacity, and performance. 2. What facts may weigh in favor of or against Chou in terms of the parties’ objective intent to contract? The facts would weigh in favor of Chou because of the language and actions of intent to contract were reasonably certain. The offeror and offerre both had serious intentions to be legally bound by the terms of the contract. 3. Does the fact that the parties were communicating by e-mail have any impact on your analysis in ...
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...discuss various business laws using the case of car sales and negotiations and the laws surrounding that business. In this paper, we will consider the case of Josh Harty, who wishes to purchase a new car. He chooses to go to a local dealer in motor vehicles. He states clearly to the salesperson that he has a specific car he wants, the 3.2 liter V-6. He chooses it over the 3.9 liter one because he has issues about the fuel economy of the 3.9 liter engine. They come to an agreement about the 3.2 liter V-6 engine car and he signs a contract to purchase it. But both of them don’t know that the vehicle manufacturer had stopped manufacturing both the 3.2 liter and the 3.9 liter engines and was now fitting cars with a 3.5 liter engine which has been newly designed. This is a mutual mistake of facts, which is very unfortunate since the customer does not get what he had wished to get, and the salesperson faces the risk of losing a sales deal. Rescission of the contract is only possible if both parties agree to the rescission. Harty can give an offer to rescind which must be accepted by the salesperson before they rescind the contract. But one party to the contract is not permitted by law to rescind the contract by simply giving a notice to the other party that he wants to do so. “A mutual mistake concerning a material fact entitles the party affected by the mistake to rescind the contract” (legal dictionary, 2015). However, this is only possible if the contract has not yet been completed...
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