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JC Smith's The Law of Contract

JC Smith's The Law of Contract (2nd edn)

Paul S. Davies
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date: 03 October 2022

p. 32223. Common mistake: contracts void for failure of a basic contractual assumptionlocked

p. 32223. Common mistake: contracts void for failure of a basic contractual assumptionlocked

  • Paul S. DaviesPaul S. DaviesProfessor of Commercial Law, UCL

Abstract

This chapter examines contracts which were avoided because of the failure of a basic contractual assumption before the contract has been concluded. If a contract has been concluded based on a particular contractual assumption, then the failure of that assumption before the contract has been concluded means that the contract is void. This is because both parties have made a fundamental mistake about a basic assumption. A contract cannot be void due to a common mistake where the risk of an assumption failing has been allocated to one of the parties under the contract, or where the failure is attributable to the fault of one of the parties. Very few assumptions are held to be ‘basic’; the threshold is set at a very high level. The failure of the assumption must, at the very least, render performance of the contract fundamentally different from what was reasonably envisaged.

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