What are the three 3 types of mistake that would make a contract void or voidable?
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When we agree to enter into a contract, we do so after gaining information regarding the agreement. If we’re satisfied with what we have been presented with, we agree to be legally bound. However, in some circumstances, the information the contract was based on is no longer true. In this case, both parties have been deceived or let down. This is known as a common mistake. When a common mistake occurs, there’s a few things to take into consideration before you proceed with a course of action. Keep reading to learn more. What Is Common Mistake In Contract Law?A common mistake is where both parties have made a fault or error in an essential fact regarding the contract. According to Australian court judgments, there are two scenarios where a common mistake will occur:
An error will not be considered a common mistake if it resulted from the carelessness or deception of one of the parties to the contract. What Is A Mistake Of Fact?A mistake of fact is one of the ways a common mistake can occur. This is when the parties have taken an untrue statement to be a fact and created a contract based on it. Example As Nadia was set to purchase the book due on the basis of it being an original copy and Paul had been deceived about the origins of his novel, this can likely be considered a common mistake. What Happens If There Is A Mistake In A Contract?If there is a mistake in the contract, the contract can be declared void or voidable in equity. However, courts may not jump to this resolution lightly. Instead, they may attempt to find an alternative way to rectify the matters. Types Of Mistake In Contract LawAside from common mistakes, there are a number of mistakes in contracts that can occur. They can all be summarised into three main categories:
We explain these in more depth below – keep reading to learn more! What Is Mutual Mistake In Contract Law?A mutual mistake is when the parties to a contract have misinterpreted the other party, resulting in a misunderstanding regarding the terms of the contract. This can be an error made regarding a sale or offer, where both parties have something different in mind to each other, and are often unaware of what the other is thinking. Example Hannah believes the offer is for the first location, which is much closer to where she lives. However, Steven was actually talking about the second location. Upon discovering this, Hannah lets Steven know she cannot take the position after all. Hannah and Steven’s situation is likely to be considered a mutual mistake, as both parties had a misunderstanding. What Is A Unilateral Mistake?A unilateral mistake is where one party makes a mistake regarding the facts of the contract, but the other party does not. This is more common than the other types of mistakes in contract law. Example As having the correct information on the age of the wine was fundamental to the purchase and could have been prevented by Malcom, it can be considered a unilateral mistake. Furthermore, omissions such as Malcolm’s in this scenario can also amount to a breach of the Australian Consumer Law with respect to misleading and deceptive conduct, so it’s always wise to be transparent when entering into contracts. Can A Contract Be Void For Mistake?If a mistake has occurred that is central to the contract, without which the contract would never have existed to begin with, then the answer here is yes. Courts do have the power to render the contract void- making it no longer enforceable. In order for courts to declare the contract void, it will need to be proven that it was a mistake where both parties were unaware of the error (such as a common or mutual mistake) and that the mistake was fundamental to the contract. A contract cannot be declared void for a mistake that is insignificant or minor, as the rest of the contract may still be valid. What Are The Consequences Of A Mistake In Contract?The consequences of a mistake in a contract will depend on the mistake itself. As we mentioned above, a mistake can lead to the contract no longer existing after becoming void. This is why it’s extremely important to have a contract reviewed by a legal professional. In other instances where one party is not completely innocent regarding the mistake (such as a unilateral mistake), the action taken by the aggrieved party can be more severe than simply being able to walk away from the contract. Where a breach of the Australian Consumer Law has occurred, the ACCC can step in to enforce the contract. I Made A Common Mistake Before Signing A Contract – What Do I Do?It’s always important to have a contract reviewed by a professional so they can pick up on any errors that may end up costing the contract all together. If you have noticed a mistake on the contract prior to entering into it, you can always choose to renegotiate the contract and have it redrafted, or you can opt out of it completely (as there is no legal obligation to be bound by it yet). I Made A Common Mistake After Signing A Contract – What Do I Do?If a common mistake has been found after a contract has been signed and the parties cannot mutually reach an agreement on how to proceed, then the courts will need to be involved. As we mentioned earlier, courts can declare the contract void or seek to remedy the situation in another way. What Is Non Est Factum?Non est factum applies when a party to a contract did not have the capacity to understand what they were agreeing to when they signed the contract. This means that they did not grasp the basic nature of the agreement. Non est factum translates to ‘not my deed’ from Latin. When it is found to apply, the party claiming cannot be bound by the contract. Key TakeawaysMistakes can occur commonly in contracts. However, they can be prevented with the right legal help. A mistake can cost you an agreement or worse, so it’s always best to take steps that can aid in making sure the situation doesn’t arise. To summarise what we’ve discussed:
If you would like a consultation on mistakes in contract law, you can reach us at 1800 730 617 or for a free, no-obligations chat. Sapna GoundanSapna has completed a Bachelor of Arts/Laws. Since graduating, she's worked primarily in the field of legal research and writing, and she now writes for Sprintlaw. Need legal help? We'll get back to you within 1 business day. What are 3 things that can cause a contract to be void?Some other reasons a contract may be considered voidable are:. Coercion or undue influence.. Withheld or misrepresented information.. Breach of contract by one or more parties.. One or more parties lacks the capacity to enter into the contract.. What are the 3 types of mistakes?Common law has identified three different types of mistake in contract: unilateral mistake, mutual mistake, and common mistake. A unilateral mistake is where one party is aware of the other party's mistake; these types of contracts are void as there is no adjoining link between the offer and acceptance.
Which type of mistake can make a contract voidable?A mutual mistake occurs when the parties to a contract are both mistaken about the same material fact within their contract. They are at cross-purposes. There is a meeting of the minds, but the parties are mistaken. Hence the contract is voidable.
What are three common mistakes that are often made when creating a contract?Common Mistakes Made in Contract Agreements. Failing to Draft a Written Contract. You can enter a contract agreement without writing anything down. ... . Copying and Pasting a Template Agreement from the Internet. ... . Signing an Agreement that You Do Not Fully Understand. ... . Not Working with a Local Business Contract Lawyer.. |