Introduction
Court claims that involve contracts emerge not only from breach of terms. In some cases, parties claim that the contract is not valid and should be voided. There are several reasons why contracts can be considered invalid because of a failure to reach mutual assent. These are a mistake, duress, undue influence, fraud and misrepresentation, and unconscionability. This short text provides a brief overview of each category and presents simple examples to explain their definitions. There are a number of court cases given that can be further explored to gain a better understanding of the topic.
Mistake
Unilateral Mistake
Unilateral mistake, as the name suggests, is when one of the parties enters into an agreement without holding a thorough knowledge of all the circumstances and consequences of its actions. Only under certain circumstances, unilateral mistakes make the contracts void (Sheinbein v. First Boston Corp., 1984). If there is a small error in the text that was not detected by the offering party, for instance, the contract might be voidable (Sheinbein v. First Boston Corp., 1984). Additionally, unconscionability may be a determining factor when assessing agreements for voidability (Sheinbein v. First Boston Corp., 1984). Sheinbein v. First Boston Corp. is an example case from Missouri in which the court’s decision was not to reform or cancel the contract because of a unilateral mistake (1984).
Bilateral Mistake
Bilateral mistakes, in contrast to the unilateral mistakes, involve both parties of the agreement and occur when the parties have understandings that are not in accordance with what the contract states (Morris v. Brown, 1997). Such errors may result in the reformation of the contract or its cancellation (Morris v. Brown, 1997). However, the presence of a mutual mistake should be proven to the court (Morris v. Brown, 1997). In Morris v. Brown, appellants pleaded that the warranty was reformed under a mutual mistake (1997). However, because the appellants could not justify their convictions, the court chose not to void the agreement and decided to leave the latest reform of the warranty in place (Morris v. Brown, 1997).
Duress
Duress is when one of the parties uses undue influence to achieve its objectives. The use of physical or psychological force, threats, coercion, and other types of deteriorating control to pressure the other party to accept the terms that are not in their best interest is considered to be coercion (Fizzell v. Meeker, 1970). Economic duress is the most common source of disputes in commercial agreements (Fizzell v. Meeker, 1970). It is when one party threatens to cancel a contract if new terms are not accepted. In Fizzell v. Meeker, the defendant put the appellants in a situation where the latter party had to part with their money in order to proceed with the contract (1970). The actions of the defendant were identified to be economic duress (Fizzell v. Meeker, 1970).
Undue Influence
When one party pursues another party to enter into an agreement by using his or her escalated position, ties, and other types of superiority, the contract can be voided (Robertson v. Robertson, 2000). The reason is that such contracts are said to be made under undue influence. In Robertson v. Robertson, the term is defined as an act of overpersuasion, which makes the testator put the will of another person before the will of his or her own (2000). In the case, appellants claimed that the defendant used his favorable position to elicit a deed from their now-deceased mother. However, the court decided that the mother acted in her interest without the undue influence on behalf of the defendant.
Fraud and Misrepresentation
When one of the parties knowingly adds false statements in an effort to mislead the other party, then such actions are labeled as fraudulent misrepresentation. If these actions are proven in the court, the contract might be voided. If there were material losses because of the falsified or misleading information, then the court might oblige the defendant to pay remedies (Wolf v. St. Louis Public Service Company, 1962). For courts to consider a certain act as misrepresentation and fraud, the representation should be false, or it should be proven that the party had an intention that the other party will rely on the misleading fact (Wolf v. St. Louis Public Service Company, 1962). Recklessly claiming what is not known for sure also counts as fraudulent misrepresentation.
Unconscionability
Another reason that may lead to the rescission of the contract is unconscionability. When the terms of the agreement are too unjust and elicit benefits for one party while significantly depriving the other, it is considered to be an unconscionable contract. The presence of duress undue influence are indicators of unconscionability. The agreement can also be voided when one party tries to limit its responsibility for the breach of terms (Wolf v. St. Louis Public Service Company, 1962). An example of an unconscionable contract is where a knowledgeable business owner presents his or her customer with a contract full of technical details and jargon. This contract is unconscionable because the offeror has the undisputed bargaining power over the offeree.
References
Fizzell v. Meeker, 339 F. Supp. 624 (W.D. Mo. 1970).
Morris v. Brown, 941 S.W.2d 835 (1997).
Robertson v. Robertson, 15 S.W.3d 407 (2000).
Sheinbein v. First Boston Corp., 670 S.W.2d 872 (1984).
Wolf v. St. Louis Public Service Company, 357 S.W.2d 950 (1962).
Appendix A
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Appendix B
Demographic Information for Cummings et al. (2002)’s Review If an appendix consists entirely of a table or figure, the title of the table or figure should serve as the title of the appendix.