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22 Cards in this Set

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  • Back
Avoidance of the K:

What is the definition of mistake?
- a belief that is not in accord with the facts at the time of K with regard to a basic or material assumption on which the K was made.
What are the two types of Mistakes?
Mutual - both parties are equally innocent or equally guilty

Unilateral- only one party is mistaken. In this instance you move the contract in favor of the least misunderstood individual
Mutual Mistake
- a pure mutual mistake is called a mistaken expression or misunderstanding

-the other type is depends on whether a particular risk is assumed or not.

- if there is a mistake to the existence or identity of the subject matter (both thought stratavarious but actually a k-mart strat did not exist) it is not an assumed risk and we set the contract aside.
- Mistake as to the value of the subject matter. That is a risk you assume and therefore we would not set the contract aside if it was a mistake on value
- Mistake as to the operation of the subject matter. Dredge a river and they both believe that it is substantial enough to dredge the river and it does not work as both parties envisioned. That risk is normally not aside.
- Mutual Mistake is subject to the conscious ignorance
Unilateral Mistake
- you should not be able to snap up a contract that is obviously erroneous.
o Did the non-erring party know or should have known of the error/mistake.
 If yes? Set contract aside.
 No? the contract would stand
In addition to the no snapping up rule there are additional factors. (go into later)
Effect of Misunderstanding
Restatement Second
Restatement (second) of Contracts

(1) There is no manifestation of mutual assent to an exchange if the parties attaché materially different meanings to their manifestations and
a. Neither party knows or has reason to know the meaning attached by the other party; or
b. Each party knows or each party has reaons to know the meaning attached by the other
(2) The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if
a. That party does not know of any different meaning attached by the other, and the other knows the meaning attaeched by the first party; or
b. That party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party
‘A contract should be held nonexistent under this Section only when the misunderstainding goes to conflicting and irreconcilable meanings of a material term that could have either but not both meanings.”

- contract is moved in favor of the most innocent party
a) S offered to sell B goods to be sold from a boat that has the same name as another one. Is there a contract if both of the parties have reason to know there are two ships named peerless, but they mean different ships? What if both parties intend the same ship?
b) Is there a K if S knows that B means the later-sailing boat and buyer does not know that there are two ships named peerless.
a) They are equally quilty
b) What if they intend the same ship—we wouldn’t have a suit we would have a K
c) Go with the understanding of the most innocent party.
Problem 108

They have been arguing over a cow then finally he says fine I will sell you the horse for $. Andew would never sell his horse and they both knew that. Can you enforce the K?
R we going to eforce this K. It is unilateral. What If it is mutual? Seller we would enforce the K to wills understanding also since he is the innocent party
They have been arguing over a cow then finally he says fine I will sell you the horse for $. Andew would never sell his horse and they both knew that
This is a unilateral K.

- you should not be able to snap up a contract that is obviously erroneous.
o Did the non-erring party know or should have known of the error/mistake.
 If yes? Set contract aside.
 No? the contract would stand
Whether a contract for sale of certain specified property, may be rescinded by the Df prior to passing of title after discovering a material part of acceptance was erroneous?
Court’s Holding: Depends on the intentions of the parties and therefor must be submitted to the jury

- the contract was for 80 she could not have a calf
- are they mistaken about the same thing? They both thought she was barren? Equally innocent? Yes.
- Did rose as a barren cow exist? no
- If you make a mistake as to the existence of the subject matter do you assume that risk? No so you set it aside
If there is a difference or misapprehension as to the substance of the thing bargained for; if the thing actually delivered or received is different in substance from the thing bargained for, and intended to be sold, then there is no K. The K maybe rescinded UNLESS there is some warranty.
What happens to the K if there is a mistake in the value? What if someone mistakenly sells a rock thinking its a rock for a dollar.
In absence of fraud or warranty the value of the property sold, as compared with the price paid, is no ground for a recission of a cale.

How does this conflict with the cow case?
Mistake in identity? No- how is this different from rose the cow. Why rn’t they likewise mistaken of the identity of the rock. Did they make any assumption? N0. They did not say this is topaz or this is diamond both claim that they really didn’t know what it was and that was the difference.
This was a mistake in Value- are we going to set it aside. Why do we have the law of contracts to protect the agreed upon price. Courts can not cast themselves in the role of saving people from bad bargains.
City commenced interpleader action seeking to determine who was proper owner of funds found in safe purchased at auction. The Superior Court, Snohomish County, Robert C. Bibb, J., established the estate seller as owner of money found in compartment of auctioned safe, and purchasers of safe appealed.
The Supreme Court, Dolliver, J., held that the objective manifestation of the auctioneer's conduct was that he was selling the safe and its contents, and, therefore, the parties mutually assented to enter into a sale of the safe and the contents in the locked compartment, especially in light of fact that the successful bidders were aware of the rule of the auction that all sales were final and the auctioneer made no statement reserving rights to any contents of the safe to the estate seller.
Reversed and remanded.
There is no basic assumption? It is a rock because this is about the value.
Mistakenly believing that he was the father of her illegitimate child, John promised mary to pay for the child's support. Mary also believed that John was the father of the child. When blookd tests shows that he could not possibly be the father. John quit paying and she sued. Does the law of mistake provid him with a defense?
This is a cow. Guys tent to pick that this is a cow. As the father of this child he simply does not exist.
Is the execution of the release for personal injuries bars subsequent suit for an injury unknown at the time of the signing?
The courts rationale: We do not today release an injured tort victim from an unfair bargain. Rather, we hold only that the law of MM applies to personal injury releases the same as to toher contracts. if it can be established that a release sets out a bargain that was never made, it will be invalidated.
Two Types

Title-warranty that the seller will convey good title to the buyer at the time of the sale

Quantity- divided into two categories

Express-is created when the seller makes an affirmation of fact (this is a new car) describes the item (it will be painted yellow) makes a proimse relating to the goods (if it doesn't work i'll fix it) or displayes a sample or model. The statement need not be in writing or even intented by the seller to be a warranty, but it must go to the basis of the bargain. If so, the statment is presumed to be part of the basis of the bargain unless the seller can prove that the buyer did not rely on the statement.

Implied warranties are created by legilatures in order to fulfill the buyer's typical expectations concerning the item purchease. The implied warranty of merchatabiligy is basically a warranty that the goods will fulfill their usual function.

When a Party Bears the Risk of a Mistake when
a) the risk allocated to him by aggrement of the parties, or
b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but threates his limited knowledge as sufficient or

the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.
Relevant Facts: An estate representative conducted an auction sale of decedent’s property, but decided it would sell more quickly if broken into two pieces. One was i/d as lot 5 the other 6; 6 had a 20' strip of land adjoining it on the east side, five had the house thereupon. Df Ewing bought lot five but no satisfactory bid was received for lot 6 that day. The representative had indicated that the boundary was near the lilac bushes, but in fact was unknown and that nobody knew exactly where the boundary was. A week after the auction Pl bought the remaining lot. 2 yrs later Df began constructing a fence alongside the house. Pl had a survey completed and learned the property line was located w/i a foot of the house’s foundation, the eaves were on the Pl’s property.

Legal Issue(s): Whether the tr ct erred in ruling that any mistake concerning the location of the boundary line was unilateral mistake?
A mistake is an unintentional act or omission arising from ignorance, surprise, or misplaced confidence. The mistake must be material or so substantial and fundamental as to defeat the object of the parties. A unilateral mistake is not normally grounds for the mistaken party.

Court Rationale: A mutual mistake occurs when both parties, at the time of signing, share a misconception about a basic assumption or vital fact upon which they based their bargain. Some cts require the parties to have the same misconception about the same vital fact or assumption. MM also includes situations in which the parties labor under differing misconceptions as to the same basic assumption or vital fact. The assumption of fact must be the same; otherwise two unilateral mistakes, instead of one, would result. Both Erhardt and Ewing mistakenly believed the boundary line was further east than it was. Neither intended that the property sold as lot 5 would fail to include the whole house. There was an unintentional act arising from ignorance, Ewing and Erhardt made a MM regarding the location of the boundary line.

The mere presence of a MM does not always afford relief. IF a party is aware that he has limited knowledge in respect to the facts related to the mistake, but treats his limited knowledge as sufficient, ~MM, but conscious ignorance and this bars relief. The extent of conscious ignorance depends upon the scope of the risk assumed. Neither party consciously assumed a risk that the line would run beneath the eaves of the house.

PER may be admitted to show by reason of MM the parties’ intent was not expressed in K. PerolEvidenceRule can be used to show true intent

Conscious ignorance doctrine top of page 502- you can not apply the conscious ingnorance doctrine in this situation
Unilateral Mistake
- one of the ways that unilateral is tested is in the subcontractor context. You get 90 bids at 21K you get one bid at 11K you are the general K you accept the bid for 11, 000.
Ask did non-earning party, general K, know or should have known the mistake? Yes. You set it adise If no the K sides
Subcontracrtor makes the mistake? Who is the non-erring party did they know or whould have known? No the contract stands.
However, mistakes in judgement are not excused. If it said 5 and you contracted for a 15.. this is not so much a problem today.
Unilateral Mistake

First Baptist Church v. Barber contracting
Church brought suit against contractor and surety seeking to recover amount of bid bond for construction of music, education and recreation building. The Superior Court, Colquitt, McLane, J., denied cross motions for summary judgment, and interlocutory appeals were granted. The Court of Appeals, McMurray, P.J., held that contractor's clerical mistake in submitting bid for construction of building for church of $1,860,000, which should have been $143,120 higher if material costs had been added correctly, was not negligence preventing equitable relief, and thus, contractor was entitled to rescind its bid upon discovering that it was based upon miscalculation.
Affirmed in part and reversed in part.
- did he make an error? Yes- his bid should have been
- second lowest bid- 1,975,000 (115,000) less
- bid too low- do they tend on setting it aside?
- No-
- This court does not use this snapping up test. By the overwhelming weight of authority.
- Different states have different factors to supplement the basic test. Some states have different tests by balancing particular factors
When computing its bid on the new schoolhouse, C construction company turned two pates of its estimate book at once and accidently ommitted a huge portion of the true amount of its bid. Other bid amounts ranged from 2,500,000 to 3,000.000. C's bid was 1,250,000, and the school board snapped it up by an immediate acceptance. Performing at this low rate will put C into bankruptcy. It there relief in the law of mistake? Will it help C if the school board undluy rushed it, while giving the other bidders greater time in which to compare their bids?
If they knew or should have know set it aside that the bid was extreamly low? yes
How would the anser change, if C had made a bid of 1,250,000 not because of missing pages in the estimate, but because C believed that the work could be completed in five months rather than 6 that were actually required?
Mistake in judgement and don’t set it aside
When C constructino company discovered that it had made a mistake that lowered its bid by 4,000, it nonetheless decided to go through with the project and accept the loss. The second lowews bidder the the P c company, its bit was 2,000 highter than that of C. Arguing that it would have been awarded the K if C mistake hwere tkaen into account, P demanded that C contract be voided for mistakte that P be awareded the Job it this arguement valid?
It is not void it is voidable if you want to live with it you can
To help with a charity golf tournament, the klick car dealership donated a new Chevy and placed it on the 9th tee with a sign saying "HOLE-In-ONE" wins this car courtesty of K. No one made a hole in one duirng the tournament. Two days laterk, before K got aournd to removing the car or taking the sign down, Amous was playing in another tournament on the same course and made a hole in one on the ninth hole. Is he entitle to the car? Did he furnish sufficient consideration for it?
Golfer sued automobile dealer to compel delivery of automobile offered as prize. The Court of Common Pleas, Lebanon County, Civil Division, No. 87- 01002, Gates, J., entered summary judgment for golfer and dealer appealed. The Superior Court, No. 500 Harrisburg 1988, Wieand, J., held that: (1) by its signs on automobile located near ninth hole, dealer made offer to award prize which golfer performed by shooting a hole-in-one; (2) adequate consideration existed for contract; and (3) mutual mistake did not exist to void contract where only mistake was dealer's failure to limit offer to previously held tournament and to remove signs.
Popovich, J., dissented and filed opinion