Contracts can be made void as result of a mistake between the parties. Ensure that your business is not exposed.
Although it is not very well known in it is actually possible for a contract to be void or voidable as a result of a mistake between the parties. Contracting parties decisions and actions are often influenced by mistake, error or misapprehension. Indeed, perhaps in those contracts one party list is mistaken to some degree as to the extent of benefit it will provide. Obviously, such unilateral mistakes of motive cannot be relieved of against. The two central questions with which mistake is concerned with is will mistake be operative and what is the effect of the mistake?
Naturally, it is always assumed that one party, whether sharing a mistake or not will resist a claim for relief, that is to say, asserts that the contract is binding according to its terms. However it is only a small proportion of mistakes that will, on any reckoning, be cognisable in contract law and constitute operative mistake. There are several different types of mistake. The first type of mistake is called common mistake. The words common and mutual a used to describe the stake situations were both parties are mistaken. A mistake is described as common where is shared by both parties and where they make the same mistake. For example, a seller and buyer of goods may make a contract under the mistaken belief that the goods existed when the contract was made, whereas in truth they have been destroyed. Although in the case of operative common mistake, the bargain falls for want of subject matter, it should not be thought that a contract is always, or even usually, ineffective merely because both parties are mistaken. Worth or otherwise, or contracts induced by innocent misrepresentation would fail.
The second major type of mistake is called mutual mistake. Although the word mutual has often been used to refer to shared mistakes, as illustrated above, there is a distinction between common and mutual mistake. This work on mutual mistake describes situations where, although parties are both be mistaken, their mistakes may differ. In such cases the objective facts are equivocal on the subjective states of mind of the parties are at odds. In mutual mistake the parties are at cross purposes in contract formation. There is only consensus on the surface and each of the parties mean different things in the formation of the contract. The final type of mistake is known as unilateral mistake. In the case of common mistake, both parties area. In the case of mutual mistake, it is not clear that either party can be described as being in an, on the other hand, a unilateral mistake is a mistake by one party only, the other not been mistaken at all. For example, one party may be mistaken as to the true identity of the other contracting party. Where such a mistake has legal consequences, it will be found that the non-mistaken party knows of the other parties mistake.
It is important to understand the way that mistakes can occurring contracts so that your business is not become involved in contracts which can be made void or voidable as a result of a mistake entering into the contract.
