This Contract is Void!

When we enter a contract we often worry about the consequences of doing so. How do we know if we are still bound to a contract? Read the post below to find out what kind of mistakes can make a contract void.

1. Mistake A mistake may entail the terms written in the contract being wrong or no agreement on the terms.  Mistakes usually result in the contract being voidable all together.

2. Mental capacity If both parties do not have the mental capacity to enter a contract, there is no consent and hence the contract is void.

3. Common mistake  A common mistake entails both parties entering into a contract based on false assumptions.  This then results in the contract being void.  If each party made false assumptions regarding the contract, this results in no agreement; thus, the contract never existed.  However, if both parties are mistaken about the value/quality of the goods, the contract will be valid.

Example: A and B enter into a contract for buying a painting produced by B. B doesn’t know that the painting has been damaged in a flood in the studio. They reach the studio and learn of the damage, this makes the contract void.

Example 2: A enters a contract to sell a painting to B for $100 and later finds out that painting is worth considerably more, this contract is still valid despite the monetary discrepancy.

4. Mutual Mistake  A mutual mistake entails both parties make a mistake about different aspects of the contract. This results in a lack of an agreement; an agreement is essential to enter a contract.

Example: H purchased a painting from K in October. K only ships paintings in November and July.  H assumed he will be receiving the painting in November and K planned on shipping the painting in July. H then sues K for the late arrival and refuses to accept the shipment.  Since no one specified when the shipment would arrive, the contract terms become ambiguous and allow a reasonable person to interpret the contract either way. Hence, the contract becomes void.

5. Unilateral Mistake This situation occurs when one party is mistaken but the other one is aware of the mistake. This can make a contract void if the mistake is related to the terms of the contract.

Example: S has two vases and R wants to purchase the vase in S’s living room. S agrees but is planning to give R an identical looking vase in her den which is worth less than the vase in the living room.  S is aware of R’s mistake but allows him to continue believing that he will be purchasing the vase in the living room.  The contract is then void.

6.Mistake of identity This involves one person being mistaken for another identity and the identity is crucial aspect of the contract and the other party is aware of the mistake.

7.Clerical mistake  This situation involves the terms of the contract being written down incorrectly. If a party can show that both parties agreed to the terms of the contracts and merely wrote down the terms of the contract wrong, the court can correct the error.  Conversely, if agreement cannot be shown then the court will assess the mistake.

8. Non Est Factum This scenario is based on the idea that it is “not my act”. It means one person was ignorant about the nature of the act that they were entering into. Some examples include: being illiterate, a disability preventing the person from interpreting the contract correctly or the person has to depend on someone else to help them understand the terms.

Did you learn something new? Press “like” to let me know and I will continue to write about similar subjects to assist you.  If you believe one of the above-noted descriptions fit your situation, you can contact a paralegal to assist you with your matter.

If you haven’t already please “like” The Social Paralegal (TSP) Facebook page and follow TSP on Twitter @SocialParalegal for the latest legal developments.

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