🏥
Remedies • Contract - Equitable Remedies
REM#067
Legal Definition
Generally, rescission is denied in the case of unilateral mistake, unless the non-mistaken party knows or should have known of the mistake. Under the modern view, rescission may also be granted where the mistaken party would suffer an undue hardship if rescission were denied.
Plain English Explanation
When someone makes a mistake on their own (a "unilateral mistake"), courts usually won't let them take back or "rescind" a deal. However, there are exceptions. If the other person involved in the deal knew about the mistake or should've known, then the court might let the person who made the mistake take back the deal. Also, in more recent times, if the person who made the mistake would face a lot of trouble or "undue hardship" without being allowed to take back the deal, the court might let them. This rule exists to ensure fairness. If one person knows the other is making a mistake and takes advantage of it, that's not fair. Also, if not allowing someone to take back a deal would cause them a lot of trouble, it's considered fair to let them take it back.
Hypothetical
Hypo 1: Sam is remodeling his house. He has asked 3 contractors to submit bids. Bob bids $10,000. Amy bids $12,000. Jill bids $11,500. Sam accepts Bob's bid. Bob realizes he forgot to add in $1,000 worth of cost and his bid should have been $11,000. Result: Bob's unilateral mistake is not Sam's problem. Sam's acceptance of Bob's offer forms a binding contract.
Hypo 2: Sam is remodeling his house. He has asked 3 contractors to submit bids. Bob bids $3,000. Amy bids $12,000. Jill bids $11,500. Sam accepts Bob's bid. Bob realizes his bid should have been $11,000. Result: Though prices can vary between companies and contractors, the drastic difference between Bob's bid of $3,000 and the other two bids is enough to argue that Sam had reason to know there was a mistake in Bob's bid, which means the contract is not formed upon Sam's acceptance.
Hypo 2: Sam is remodeling his house. He has asked 3 contractors to submit bids. Bob bids $3,000. Amy bids $12,000. Jill bids $11,500. Sam accepts Bob's bid. Bob realizes his bid should have been $11,000. Result: Though prices can vary between companies and contractors, the drastic difference between Bob's bid of $3,000 and the other two bids is enough to argue that Sam had reason to know there was a mistake in Bob's bid, which means the contract is not formed upon Sam's acceptance.
Visual Aids
Related Concepts
How does election of remedies affect a claim for rescission?
If a contract has a liquidated damages clause, is specific performance still an option?
What are common defenses to specific performance?
What are defenses to rescission?
What are equitable remedies in contract?
What are the defenses to formation?
What happens if a plaintiff is entitled to rescission but has already performed?
What is reformation?
What is rescission?
What is specific performance and when it is applicable?
What is the part performance exception to the Statute of Frauds?
What type of mutual mistake is sufficient for rescission?
When applying specific performance to a land purchase contract, what happens if a buyer breaches a "time is of the essence" clause with a forfeiture clause?
When applying specific performance to a land purchase contract, what happens if the quantity of land is in dispute?
When assessing reformation, what constitutes sufficient grounds?
When assessing specific performance, how do courts weigh feasibility of enforcement?
When assessing specific performance to acquire a unique piece of property, when is uniqueness tested?
When assessing specific performance, what must the status be of a plaintiff's contractual conditions?
When assessing specific performance, why are money damages sometimes an inadequate legal remedy?
When assessing whether money damages are inadequate for specific performance, why does it matter whether a piece of property is unique and what kind of property is always unique?
When is personal property considered unique enough to trigger specific performance?