Book Opener

Mistake, Duress, andUndue InfluenceMistakeThe purpose of contract law is to fulfill the reasonable expectationsof the parties to a contract. People sometimes enter into contractsbelieving that certain information is true when it is actually not, or thatinformation is not true when it really is. When the truth is learned, oneor both of the parties may wish to avoid the contract. Canceling thecontract may or may not be possible. See Figure 6.3 for the types ofmistake that can disrupt an agreement.Unilateral MistakeA unilateral mistake is an error on the part of one of the partiesto the contract. A person usually cannot avoid a contract because ofsuch a mistake. Through words or actions, one party has created reasonableexpectations on the part of the other party to the contract.Those expectations should not be blocked because one of the partieshas made an error.Example 5. The town of Sharonville received four bids for constructionof a new city hall. Angelini Construction won the contractbecause its bid was the lowest. A few days later, Angelini’sgeneral manager discovered the bid should have been $2 million,not $1.5 million. The error was discovered too late. Thecompany is bound by the bid it made to build the city hall for$1.5 million.Mistake as to the Nature of the Agreement A mistake as to thenature of the agreement is one type of unilateral mistake. It cannot bean excuse to avoid a contract. Let’s say you sign a contract to mowyour neighbor’s lawn through the summer, and the written agreementsays this means mowing every week. You would be obligated to fulfillthat schedule—even if you believe that you agreed orally to mow thelawn only every other week.People who sign an agreement are bound to it, even if they havenot read it or are mistaken about what it says. Your signature showsthat you agree that the contract sets forth the terms of the agreement.This rule even applies to those who cannot read English. People whodon’t understand English are expected to have the agreement read andexplained to them by someone they trust.l How to distinguishbetween unilateraland bilateral mistakel How to recognize thetypes of mistake thatwill allow rescissionof a contractl How to recognizethe requirementsof economic duressl How to recognizethe requirementsof undue influenceRecognizing how mistake,duress, and undueinfluence can affectagreements will helpyou make better decisionsin such situations.l unilateral mistakel bilateral mistakel duressl economic duressl undue influenceChapter 6: Genuine Agreement 133