Section 6.2 Mistake, Duress,
and Undue Influence
Genuine Agreement
In addition to fraud and
misrepresentation, mistake, duress,
and undue influence can also create a
defective agreement.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Pre-Learning Question
How can a mistake disrupt an
agreement?
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Mistake
People sometimes enter into contracts
believing that certain information is
true when it is actually not, or that
information is not true when it really is.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Unilateral Mistake
A unilateral mistake is an error on
the part of one of the parties to the
contract.
Through words or actions, one party
has created reasonable
expectations on the part of the other
party to the contract.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Unilateral Mistake
Those expectations should not be
blocked because one of the parties
has made an error, or mistake.
A person usually cannot avoid a
contract because of such a mistake
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Unilateral Mistake
There are two types of unilateral
mistakes.
1. Mistake as to the nature of the
agreement
2. Mistake as to the identity of a party
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Mistake as to the
Nature of the Agreement
People who sign an agreement are
bound to it, even if they have not read
it or are mistaken about what it says.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Mistake as to the
Identity of a Party
If you make an offer by letter to one
party, but the wrong person mistakenly
receives the offer, the mistake may be
cause to void the contract.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Mistake as to the
Identity of a Party
If you make the same offer face-toface with a person whose identity you
have mistaken, your mistake as to the
identity will not prevent a binding
contract.
Understanding Business and Personal Law
Genuine Agreement
6.2
Section
6.2 Mistake, Duress,
and Undue Influence
Remedies for Unilateral Mistakes
Unilateral Mistake
Type of Mistake
1. Mistake as to the
nature of the
agreement.
2. Mistake as to the
identity of a party
Understanding Business and Personal Law
Remedy
1. Rescission will not
be granted.
2. Rescission may be
granted.
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Bilateral Mistake
When both parties to a contract are
mistaken about some important fact,
this is called a bilateral mistake, or
mutual mistake.
When this mistake occurs, either
party may avoid the contract.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Bilateral Mistake
There are two types of bilateral
mistakes.
1. Mistake as to the possibility of
performance
2. Mistake as to the subject matter
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Mistake as to the
Possibility of Performance
If both parties enter into a contract
believing that the duties described in
the agreement can be performed,
when in fact, they cannot, either party
may avoid the contract.
Understanding Business and Personal Law
Genuine Agreement
6.2
Section
6.2 Mistake, Duress,
and Undue Influence
Remedies for Bilateral Mistakes
Bilateral Mistake
Type of Mistake
1. Mistake as to
possibility of
performance.
2. Mistake as to the
subject matter.
Understanding Business and Personal Law
Remedy
1. Rescission will be
granted.
2. Rescission will be
granted.
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
True or false—Both parties may avoid
contracts involving unilateral and
bilateral mistakes.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
ANSWER
False
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Pre-Learning Question
What do you think duress is?
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Duress
Duress is overcoming a person’s will
by use of force or threat of force or
bodily harm.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Types of Duress
Physical duress is when actual
physical violence is used to force a
person to enter a contract.
Emotional duress is when the threat of
physical force is used to force a
person to enter a contract.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Types of Duress
Economic duress is when threats to
a person’s business or professional
reputation are used to force a party to
enter a contract.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Pre-Learning Question
What do you think undue influence is?
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Undue Influence
Undue influence occurs when a
person uses unfair and improper
persuasive pressure to force another
person to enter into an agreement.
Understanding Business and Personal Law
Genuine Agreement
Section 6.2 Mistake, Duress,
and Undue Influence
Undue Influence
Circumstances such as ill health, old
age, and mental immaturity may put a
person in a weaker position.
Understanding Business and Personal Law
Genuine Agreement