Question

When a party to a contract makes a unilateral mistake, the contract generally can be rescinded by the mistaken party?

1) True
2) False

Answer 1

The statement that a contract can be rescinded by the mistaken party when a unilateral mistake is made is generally false, unless certain conditions are met.

Step-by-step explanation:

When a party to a contract makes a unilateral mistake, the contract generally can be rescinded by the mistaken party. The statement as presented is false. In contract law, a unilateral mistake is where only one party is mistaken about a basic assumption on which the contract is made. Generally, the contract is not voidable by the mistaken party merely because they made a unilateral mistake. However, a contract may be rescinded due to a unilateral mistake if:

• The non-mistaken party knew or had reason to know of the mistake.
• The mistake is such that enforcement of the contract would be unconscionable.
• The mistake relates to a material feature of the contract, and the contract has yet to be significantly changed.

If none of these conditions are met, the contract typically remains binding, and the mistaken party does not have the right to rescind based solely on their unilateral mistake.