BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Material facts are important facts that influence the parties’ decisions about a contract. In some states, the contract is still valid if the mutual mistake is about the applicable law. Unilateral mistakes create the right to rescind or void the contract. All persons are presumed to know the law.

Detailed explanation-2: -It is a general rule of contract law that a material mistake common to both parties to a contract voids the contract. The contract is void because the parties reach consensus on the basis of the existence of material facts which subsequently appear to be false.

Detailed explanation-3: -A mutual mistake occurs when the parties to a contract are both mistaken about the same material fact within their contract. They are at cross-purposes. There is a meeting of the minds, but the parties are mistaken. Hence the contract is voidable.

Detailed explanation-4: -The two forms of mistakes of fact are mutual mistakes and unilateral mistakes. A mutual mistake occurs when both parties have an erroneous belief while a unilateral mistake only involves the misunderstanding of one party.

Detailed explanation-5: -Which of the following is true regarding the effect of an innocent misrepresentation on a contract? It permits either the party that was misled by the false statement or the party who made the false statement to rescind the contract, and it also makes the contract void and of no effect.