134 MODULE 23 CONTRACTS

EXAMPLE: Sand B make a contract ill which B agrees to buy a boat from S. Although neither party knew it
at the time, this boat had been destroyed before this contract was made. This is a mutual mistakeabout the
existence of the boat; therefore, either party may void this contract by law. Note that legally either party may
pull out although usually only one party may wish to do so.

(a) Also exists when both parties reasonably attach different meanings to word or phrase
(b) Also called bilateral mistake

(c) Mistake about value of subject matter is not grounds for voiding contract
(2) Unilateral mistake generally does not allow party to void contract
(a) Major exception for mistakes in computations for bids
1] Contract based on mistake is voidable by party making mistake if calculation is far
enough .off so that other party should have known that a mistake was made

d. Duress-a contract entered into because of duress can be voided because of invalid consent
(1) Any acts or threats of violence or extreme pressure against party or member of party's family,
which in fact deprives party of free will and causes him/her to agree, is duress
EXAMPLE: X threatens to criminally prosecute Y unless he signs contract. This contract is made under du-
ress.

(a) May involve coercion that is social or economic that leaves him/her with no reasonable al-

ternative
(2) Physical duress in which party agrees to contract under physical force
(3) Extreme duress causes agreement to be void

(4) Ordinary duress creates voidable agreement

e. Undue influence-unfair persuasion of one person over another which prevents understanding or
voluntary action

(1) Usually occurs when very dominant person has extreme influence over weaker person
(a) Weakness can result from physical, mental, or emotional weakness or combinations of
these, .
(2) Also occurs through abuse of fiduciary relationship (e.g., CPA, attorney, guardian, trustee,
etc.)

(3) Normally causes agreement to be voidable

f. Changes in weather conditions, economic conditions, etc., that cause hardship to one party will not
create voidable contracts when conditions are not so extreme that the parties could have contem-
plated them
EXAMPLE: B had a contract to purchase 50,000 gallons of heating oil from S at specified prices. B refuses to
take more than 40,000 gallons because the weather was wanner than normal. B is obligated on all 50,000 gallons
because the warmer weather could have been contemplated by the parties.

g. Infancy, incompetency, and noncompliance with Statute of Frauds may also create voidable con-
tract

h. Adhesion contract-offeror is in position to 'say "take it or feave it" because of superior bargaining
power
(1) Usually occurs when large business entity requires its customers to use their standard form
contract without allowing modification

1. Traditionally under US law, central theory of contract law has been freedom of contract
(1) Is still central to contract law, but state and federal governments have been enacting increased
statutes protecting consumers, debtors, and others from unfair contracts

(2) Also, courts have been increasingly using some common law ideas to allow some unjust or
oppressive contracts to be unenforced
(3) This om of
m contract
o (a) Trend is encouraged by sellers' use of more form contracts being used now that frequently
d offer goods and services to buyers on a take-it-or-leave-it basis
e
r 1] Sellers today frequently have more power over contracts than they historically did
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