Mistake


The term mistake is used in contract law to describe the situation in which one or both of the parties to an agreement acted under an untrue belief about the existence or nonexistence of a material fact. In mistake cases, unlike fraud and misrepresentation cases where the victim is also acting under a mistaken belief about the facts, the mistaken belief about the facts is not the product of a misstatement by the other party. Mistaken in this sense does not include errors of judgment, ignorance, or a party’s mistaken belief that he or she will be able to fulfill certain obligations under a contract. The things that were said about materiality and fact in the law misrepresentation hold true in mistake cases.

In deciding mistake cases, courts often seem to be trying more obviously to do justice than in other kinds of cases. This is why decisions in mistake cases sometimes seem to depart from the announced rules of law dealing with mistake.

Mistake cases are classified as mutual or unilateral, depending on whether both or only one of the parties was acting under a mistaken belief about a material fact. Mutual mistake is always a basis for granting rescission of the contract at the request of either party. Clearly, no meeting of the minds took place and therefore no true contract was ever formed.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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Termination of Agency Agreement


  1. Termination by expiration of the specified period in which the agent has to act. The courts say that the agency was for a “reasonable” time if no specific duration was stated in the agency agreement. The meaning of “reasonable time” is construed by the courts on a case-by-case basis, depending on the nature of the agency, the difficulty of accomplishment, and other controlling factors.
  2. Termination by specific agreement to do so between the principal and the agent.
  3. Termination by death or legal incapacity (insanity and so on) of either the principal or the agent. Most courts also hold that bankruptcy of either the principal or the agent terminates the relationship. However, the agent may still dispose of the principal’s property that is being held at the time of the bankruptcy.
  4. Termination through revocation by the principal. The agency contract is one that the principal is allowed to end at any time without giving any reason.
  5. Termination by withdrawal of the agent. This may be done at any time in an agency at will. If the agent is operating under a contract for a specified time of service or until a certain event is accomplished, the agent will be liable of damages to a principal who was not at fault in bringing about the termination.
  6. Termination by loss or destruction of the subject matter or by change of circumstances. The agent’s authority is lost if the subject matter is seriously disabled, lost, or destroyed.
  7. Termination by rescission. The general rules of law concerning rescission apply to agency contract.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Delayed Performance


Delayed performance will always justify a claim of damage where it can be shown that loss was occasioned by the delay. Most courts hold, however, that delayed performance will not be a material breach justifying rescission unless performance by a certain date is a condition precedent in the contract. If the late performer has any reasonable excuse for delay, the courts may allow damages but will seldom agree to rescission.

In agreements for the sale of marketable merchandise, however, a contract calling for shipment or other performance within a designated time is generally held to be a condition precedent. The difference between merchandise contracts and other contracts is in the position of the injured parties. A delay of a week in obtaining possession of a new home would not likely be crucial to the average home buyer. But a merchant’s success depends on the prompt delivery of goods to customers. Often advertising and sales programs are scheduled around specific delivery dates. Consequently, a delay in the shipment of merchandise is usually held to be a material breach.

Delay cannot be tolerated indefinitely in any kind of contract, however. After the passage of a reasonable time without performance the courts will permit rescission in almost any kind of contract. What is a reasonable time will vary with the type of agreement and all the surrounding circumstances. If no date is specified in the agreement, the courts interpret this to mean that performance must be done within a reasonable time. When time is of great importance, the contract should always be drafted to read that “time is definitely of the essence in the performance of this contract.”

In a bilateral contract, the injured party cannot regard the other party as being in default until the injured party has offered to perform. In legal circles, this offer by the injured party is called a tender. Depending on the terms of the contract, the tender must be either an offer to pay or an offer to perform a service.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.