Breach of Contract – Affirmative Defense – Unilateral Mistake of Fact
This instruction is vital for understanding how a defendant can argue that a contract, otherwise binding, should not be enforced due to a significant mistake made by one party at the time the contract was entered into.
A unilateral mistake of fact occurs when one party to the contract is under a mistaken belief about a critical factual element that is fundamental to the agreement. This defense hinges on the notion that the mistaken party would not have entered into the contract had they known the true facts. The unilateral mistake must be significant enough to make the contract’s enforcement unconscionable or exceedingly unfair to the mistaken party.
Criteria for the Defense
For this defense to be viable, several specific criteria must be met:
- Existence of a Mistake: There must be a clear demonstration that a mistake of fact occurred. This mistake must pertain to a basic assumption on which the contract was based and must have a material effect on the agreed exchange. It’s not enough for the mistake to be trivial or unrelated to the contract’s central terms.
- Materiality of the Mistake: The mistake must be significant, affecting the very essence of the contract. It should be of such a nature that the contract’s terms would have been substantially different if both parties had understood the actual facts.
- Unconscionability: The enforcement of the contract, given the unilateral mistake, must be shown to be unconscionably unfair to the mistaken party. This means that upholding the contract would result in an outcome so unjust that it would be unreasonable to enforce the agreement as it stands.
- Notification: The defense must also show that the mistaken party did not bear the risk of the mistake under the contract’s terms and that the non-mistaken party had reason to know of the mistake or caused it, directly or indirectly.
This defense provides a legal avenue for relief in situations where enforcing a contract would be fundamentally unfair due to one party’s significant misunderstanding of a critical fact. It emphasizes the importance of fairness and equity in contractual relationships, allowing courts to decline enforcement of a contract that, due to unilateral mistake, fails to reflect the true intentions and understanding of the parties involved.
Strict adherence to the letter of a contract may not always lead to just outcomes, especially in cases where significant mistakes affect one party’s understanding and expectations. By providing for this defense, the law ensures that contractual justice is tempered with a sense of fairness and equity.
Disclaimer
The content of this blog is intended solely for informational purposes and does not constitute legal advice. Legal issues are complex and individual; as such, if you seek guidance on a specific legal concern, please consult with a licensed attorney. Contact A.E.I. Law, P.C. at (888)-423-4529 for personalized legal counseling.
