Example Of Mutual Mistakes In Contract Law Report

In this situation, a mutual mistake of fact was made by both parties since both parties at the time shared a mutual misconception that the manufacturer still manufactured a 3.2 litre engine car. The contract was entered into under false assumptions by both parties and in fact, a mutual mistake of an important fact was made. The sales person in this situation does not seem to have made the mistake intentionally so the contract, in this case, can be rescinded. However, if the client, Josh Hartly would agree to change the terms of the contract and agree to buy a car with the new type of engine being manufactured, then the contract does not need to be cancelled. In this situation, the sales contract can continue. In this scenario, both parties made a mistake and so the validity of this contract is affected by a mutual mistake. If the agreement is made under a mutually mistaken assumption of a basic fact, making the contract voidable by the negatively affected party if the mistake has a substantial effect on the contact. On the contrary, the said contract is based on a mutual mistake of fact and is not voidable by the negatively affected party. Hence, yes, the parties to a sales contract should rescind the contract based on the fact that both assumed to be true but were false. The contract should be rescinded since it was made on a mutual mistake of fact that the 3.2 liter engine was still manufactured. It is a general rule that a party to the contract has no obligation to volunteer information to the other party. Therefore, if no information was inquired for the non-disclosure of that information, then this does not impair the validity of the contract or demand liability. However, in this case, it does not seem that either party acted unethically because the sales person was not aware that the manufacturer had changed his products. This sales person seems to have given all the information they had at the time of signing the contract. According to Article 2 of the UCC (Uniform Commercial Code), a merchant is defined as a person who transacts in goods of the type, holds himself by occupation as having skill distinct to the services or goods implied in the transaction or holds itself out as having the knowledge by occupation to the type of good. So under the UCC laws the sales person, in this case, can be considered as a merchant. He is therefore held to industry standards meaning he should have had prior knowledge that the manufacturer had stopped manufacturing the 3.2 liter engine prior to entering into a contract with the buyer. In addition, he should have informed the customer as to these changes before Hartly signed the contract. As a merchant, the UCC holds the sales person to industry standards and is, therefore, responsible for the mistake because ordinary consumers are not familiar with the industry. In contract law, when a contract is rescinded due to a mutual mistake of fact there are no distinct losers or winners because both parties do not get what they wanted. The sales person is a loser because he does not get to make a car sale but also wins because he is not held liable for the mistake. On the other hand, Hartly is a winner since he does not buy a car with an engine he doesn’t want but still does not get to buy the car that he wanted.