What You'll Learn
- The effect of invalidating conduct
- Mutual and unilateral mistake
- Misrepresentation and fraud
- Duress and undue influence
- Rescission and reformation
Educational information only; not legal advice. This article is a general study aid and should be checked against current authority and course materials.
1. Void Is Different from Voidable
Problem Usual effect in the outlines
Physical force / fraud in the execution Void: no meaningful assent to the transaction itself.
Mutual or qualifying unilateral mistake Voidable by the adversely affected party, subject to risk allocation.
Fraud in the inducement / material misrepresentation Voidable by the misled party.
Improper threat or undue influence Voidable by the coerced or unfairly persuaded party.
2. Mistake
Mutual mistake
1 Both parties were mistaken about a fact existing when the agreement was made. 2 The fact concerned a basic assumption of the contract. 3 The mistake materially affected the agreed exchange. 4 The party seeking relief did not bear the risk of mistake.
Unilateral mistake
One party is mistaken. Relief generally requires the mutual-mistake elements plus a stronger equity reason: enforcement would be unconscionable, or the other party knew, had reason to know, or caused the mistake.
Key Takeaway
A party may bear the risk because the agreement assigns it, the party consciously proceeds with limited knowledge, or the court reasonably allocates the risk under the circumstances. A party that assumed the risk ordinarily cannot rescind merely because the uncertain fact turned out badly.
3. Misrepresentation and Fraud
A misrepresentation is an untrue assertion made at contracting. It may be intentional, negligent, or sometimes innocent. The party seeking avoidance generally shows an assertion of present fact that was fraudulent or material and that justifiably induced assent.
Doctrine What happened Effect
Fraud in the execution The victim was deceived about the character or essential nature of the document and did not know it was the contract claimed. Void.
Fraud in the inducement The victim understood the transaction but entered because of an intentional material falsehood. Voidable.
Nondisclosure Silence ordinarily is not fraud in an arm’s-length deal, but duties can arise from active concealment, half-truths, correction of a basic mistake, or good-faith obligations. Fact-dependent.
4. Duress and Undue Influence
Duress
Duress requires wrongful pressure that overcomes meaningful choice. Physical compulsion is treated as no assent. An improper threat - including qualifying economic pressure - makes the contract voidable when it actually induces agreement and leaves no reasonable alternative. A threat to pursue a legitimate civil claim is not automatically improper; a threat of criminal prosecution is treated much more severely.
Undue influence
Undue influence is unfair persuasion by a dominant person over a susceptible party, often within a confidential or dependent relationship. The outlines focus on susceptibility, opportunity to influence, disposition to pursue an improper purpose, and a result showing the effect of the influence.
5. Rescission vs. Reformation
Rescission
Unwinds the transaction and seeks to return the parties to their pre-contract positions. It is appropriate when the protected party elects to avoid a voidable agreement.
Reformation
Corrects a writing so it reflects the agreement the parties actually made. The contract remains, but the document is rewritten to match true intent.
Key Takeaway
A contractor accidentally omits $40,000 from a bid. The owner immediately recognizes the arithmetic error and accepts before the contractor notices. The contractor should analyze unilateral mistake: basic assumption, material effect, no assumed risk, and the owner’s reason to know. Rescission is stronger than enforcing the mistaken number.
Exam Tip
- Identify the defective fact, statement, or pressure. 2. State when it occurred. 3. Apply the doctrine’s elements. 4. Address knowledge and justifiable reliance. 5. Allocate the risk. 6. Label the transaction void or voidable. 7. Choose rescission, reformation, or damages and discuss restitution.
Common Mistake
Calling every prediction a misrepresentation of fact; skipping risk allocation in mistake; treating silence as automatic fraud; analyzing economic pressure without the no-reasonable-alternative requirement; and confusing rescission with reformation.
Primary Authorities
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● Restatement (Second) of Contracts §§ 151-164 and related invalidating-conduct principles.
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● Mistake, misrepresentation, duress, undue-influence, rescission, and reformation rules described in the uploaded
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Contracts outlines.
Exam-ready conclusion
Invalidating conduct protects meaningful assent. Mistake focuses on shared or known factual error and risk; misrepresentation focuses on induced reliance; duress and undue influence focus on impaired choice. The legal effect and remedy must match the defect.