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    Can a party rely on unilateral mistake (as to terms) to render a contract void where it induced the other party to enter it? In other words, A made B to enter a contract by failing to disclose certain facts (it is not an issue of misrepresentation) and subsequently A tried to argue that the contract never existed even though it's A's own fault. Is there any authority on this issue?

    I know that as far as 'mutual' mistakes are concerned then the guilty party cannot use this but does the same go for unilateral mistake? Thanks.
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    (Original post by klinkerhoffen)
    Can a party rely on unilateral mistake (as to terms) to render a contract void where it induced the other party to enter it? In other words, A made B to enter a contract by failing to disclose certain facts (it is not an issue of misrepresentation) and subsequently A tried to argue that the contract never existed even though it's A's own fault. Is there any authority on this issue?

    I know that as far as 'mutual' mistakes are concerned then the guilty party cannot use this but does the same go for unilateral mistake? Thanks.
    If A creates B's mistake, which induces B to contract, then the courts have shown willingness to destroy the contract. However, I don't get your scenario. If B is mistaken, and was induced into the the contract, why would A want to have it voided?

    The case law on this are the mistaken identity rogue ones and such like. A causes B to believe that he is a reputable business, inducing B to send him goods, which he then sells on.
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    Most unilateral mistake cases include a "man of straw". I'm pretty sure you can claim rescission for mistake, so long as there are no bars to rescission, but I may be mistaken (O no he didnt!) as I haven't covered it yet in my revision!
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    (Original post by klinkerhoffen)
    Can a party rely on unilateral mistake (as to terms) to render a contract void where it induced the other party to enter it? In other words, A made B to enter a contract by failing to disclose certain facts (it is not an issue of misrepresentation) and subsequently A tried to argue that the contract never existed even though it's A's own fault. Is there any authority on this issue?

    I know that as far as 'mutual' mistakes are concerned then the guilty party cannot use this but does the same go for unilateral mistake? Thanks.
    It's against the general principles of equity. The courts won't let you have rescission if you've acted in bad faith.
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    Thanks.
    (Original post by The West Wing)
    It's against the general principles of equity. The courts won't let you have rescission if you've acted in bad faith.
    It makes perfect sense but it is a contract law question and we're not supposed to discuss equity or any other stuff that we haven't studied yet.
    (Original post by Clip)
    If A creates B's mistake, which induces B to contract, then the courts have shown willingness to destroy the contract. However, I don't get your scenario. If B is mistaken, and was induced into the the contract, why would A want to have it voided?
    The case law on this are the mistaken identity rogue ones and such like. A causes B to believe that he is a reputable business, inducing B to send him goods, which he then sells on.
    I will try to explain it more clearly: A and B make a contract. However, A fails to disclose certain information and B would not have entered the contract if he knew of it (A was perfectly aware). Consequently, A is in breach and claims that the contract never existed.

    So I am wondering whether the doctrine of mistake comes into play at all and whether I should discuss it.
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    (Original post by klinkerhoffen)
    Thanks.

    It makes perfect sense but it is a contract law question and we're not supposed to discuss equity or any other stuff that we haven't studied yet.

    I will try to explain it more clearly: A and B make a contract. However, A fails to disclose certain information and B would not have entered the contract if he knew of it (A was perfectly aware). Consequently, A is in breach and claims that the contract never existed.

    So I am wondering whether the doctrine of mistake comes into play at all and whether I should discuss it.
    Equitable principles still apply in contract cases. Rescission is an equitable remedy which it is in the court's discretion to refuse to provide (the same is true for specific performance). The situation you suggest is very odd. If I understand correctly, B has entered a contract with A. Had A disclosed certain information, B would not have entered the contract. Are you trying to argue that *A* could have the contract declared void for mistake?

    Under most circumstances, this would not make the contract void for mistake. Unless the information changed and A failed to disclose this, OR the contract were one of the rare instances of contracts uberimae fidei, there's no positive duty to disclose.

    Even if the contract *were* void for mistake, it would be up to B to argue this. Unless I'm much mistaken, A would be estopped from arguing that there was no contract/relying on its own non-disclosure to escape from the contract.

    You also seem to be confusing breach, a contract's being void for mistake, and a contract's being voidable through rescission. Breach can only occur when a contract exists. A contract which has been rescinded, or which is void, cannot give rise to damages for breach. In either case, the obligations under the contract are at an end, so they cannot be breached. I expect one could bring a claim in restitution or tort, but these alternate remedies lie outside contract (and presumably outside your syllabus).

    Rescission unwinds a contract and places both parties in the positions they occupied before the contract was formed--hence why it is an equitable remedy. It may involve paying expenses back--see the Misrepresentation Act 1967 for an example of how this works. Rescission will be barred when a third party has gained rights in the subject matter of the contract, or when restitutio ad integrum is impossible.

    If a contract is *void*, then it never existed at all. This may seem a subtle distinction, but it is crucial in practise. The court has no discretion to hold that the contract continues. Consider a case of mistake of identity induced by fraud. It might seem that this is a misrepresentation, but most claimants will plead *mistake*, not misrepresentation. Rescission is a remedy for misrepresentation, but can be barred where a third party has gained rights in the subject matter of the contract. A contract is void for mistake, not voidable, which means the claimant will be able to recover his property whether a third party has gained rights or not. This makes a finding of unilateral mistake claimant-friendly, and hard on third parties.
 
 
 
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