Mistake vs. Misunderstanding (Need K experts) Forum

[soaponarope]

What is the best way to distinguish between these two doctrines?

I know that misunderstanding there is no K (Void) and Mistake the K is (voidable).

I'm wondering though, how someone can "assent" to a material fact when the fact isn't true, i.e. A wants to purchase a Hen from B. B sells "Hen" to A. Both A and B believe it is a "Hen," but in fact it is a "Rooster." Is that a mistake? A belief that is not in accord with the facts at the time of K formation?

If so, that seems to me that it is a misunderstanding... can someone help me flesh out the distinction b/w the two doctrines. TIA.

[$$$$$$]

What is the best way to distinguish between these two doctrines?

I know that misunderstanding there is no K (Void) and Mistake the K is (voidable).

I'm wondering though, how someone can "assent" to a material fact when the fact isn't true, i.e. A wants to purchase a Hen from B. B sells "Hen" to A. Both A and B believe it is a "Hen," but in fact it is a "Rooster." Is that a mistake? A belief that is not in accord with the facts at the time of K formation?

If so, that seems to me that it is a misunderstanding... can someone help me flesh out the distinction b/w the two doctrines. TIA.

do you mean misrepresentation? pretty sure there is no doctrine of misunderstanding in contract law. and also, the above example is a mistake

[stratocophic]

What is the best way to distinguish between these two doctrines?

I know that misunderstanding there is no K (Void) and Mistake the K is (voidable).

I'm wondering though, how someone can "assent" to a material fact when the fact isn't true, i.e. A wants to purchase a Hen from B. B sells "Hen" to A. Both A and B believe it is a "Hen," but in fact it is a "Rooster." Is that a mistake? A belief that is not in accord with the facts at the time of K formation?

If so, that seems to me that it is a misunderstanding... can someone help me flesh out the distinction b/w the two doctrines. TIA.

Misunderstanding is due to an ambiguity in the terms, where 2 interpretations are reasonable. Courts might look at whether one interpretation is unreasonable and assign the party w/ that interpretation the risk. Two ships called Peerless sailing on 2 different dates is the stock example.

Mistake is based on having an incorrect belief about a basic assumption the K is based on, rather than just being a term that could be interpreted in multiple ways or have multiple meanings. E.g. a rare coin is a fake, and both parties believe it is genuine. The buyer paid more than it was worth, and the K is avoidable as a result. RS 152-154 covers it, pretty good explanations and ways to deal with it.

Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case

Second Edit: your example's like that cow case that's so famous I forgot its name. Something about there being a mistake about the fundamental nature of the thing that's being sold, i.e. a cow that can breed is materially different from a cow that is only good for beef. Similarly, chickens which produce eggs are materially different from roosters, which are generally only good for being douchebags and attacking people. That would be a mistake. There was an incorrect belief (thought it was good for something) about a material (important) assumption upon which the K was formed (you're not getting your eggs) that turned out to be false (absolutely worthless, and really kind of a tool). In this case, it's a mutual mistake. If only one party thought it was a hen, it'd be unilateral and avoidable at the election of the party which was mistaken.

[Mauve Velociraptor]

I think what you're referring to when you say misunderstanding is correctly known as a mutual mistake.

Mistake:
• Mutual mistake (A) – where both parties make a mutual mistake about an item, and neither
party has committed a fraud, there is no mutual assent because the parties agreed on
something completely different. Therefore courts will usually award restitution damages.
• Mutual mistake (B) – where one party makes a mistake so obvious that it should have been
clear to the other party that it was a mistake.
• Unilateral mistake – one side makes a mistake that is not so obvious that the other party could
realize, the mistake is not excusable and the contract is still binding.
o Equitable Exception – a unilateral mistake where (a) it would be unconscionable to
make the mistaken party fulfill the contract, and (b) the other party would not lose
anything by the lack of fulfillment, the mistaken party can be excused from fulfilling the
contract.
o Some courts will only apply the equitable exception if the mistake is a clerical error.
Rescission: the court cancels the contract and excuses both parties from the
contract.

[motedust]

What is the best way to distinguish between these two doctrines?

I know that misunderstanding there is no K (Void) and Mistake the K is (voidable).

I'm wondering though, how someone can "assent" to a material fact when the fact isn't true, i.e. A wants to purchase a Hen from B. B sells "Hen" to A. Both A and B believe it is a "Hen," but in fact it is a "Rooster." Is that a mistake? A belief that is not in accord with the facts at the time of K formation?

If so, that seems to me that it is a misunderstanding... can someone help me flesh out the distinction b/w the two doctrines. TIA.

Misunderstanding is due to an ambiguity in the terms, where 2 interpretations are reasonable. Courts might look at whether one interpretation is unreasonable and assign the party w/ that interpretation the risk. Two ships called Peerless sailing on 2 different dates is the stock example.

Mistake is based on having an incorrect belief about a basic assumption the K is based on, rather than just being a term that could be interpreted in multiple ways or have multiple meanings. E.g. a rare coin is a fake, and both parties believe it is genuine. The buyer paid more than it was worth, and the K is avoidable as a result. RS 152-154 covers it, pretty good explanations and ways to deal with it.

Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case

+1...but I could have written it out faster.

[soaponarope]

What is the best way to distinguish between these two doctrines?

I know that misunderstanding there is no K (Void) and Mistake the K is (voidable).

I'm wondering though, how someone can "assent" to a material fact when the fact isn't true, i.e. A wants to purchase a Hen from B. B sells "Hen" to A. Both A and B believe it is a "Hen," but in fact it is a "Rooster." Is that a mistake? A belief that is not in accord with the facts at the time of K formation?

If so, that seems to me that it is a misunderstanding... can someone help me flesh out the distinction b/w the two doctrines. TIA.

Misunderstanding is due to an ambiguity in the terms, where 2 interpretations are reasonable. Courts might look at whether one interpretation is unreasonable and assign the party w/ that interpretation the risk. Two ships called Peerless sailing on 2 different dates is the stock example.

Mistake is based on having an incorrect belief about a basic assumption the K is based on, rather than just being a term that could be interpreted in multiple ways or have multiple meanings. E.g. a rare coin is a fake, and both parties believe it is genuine. The buyer paid more than it was worth, and the K is avoidable as a result. RS 152-154 covers it, pretty good explanations and ways to deal with it.

Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case

Ah... ok. I think I get it. So what you're saying is, in order for a misunderstanding to be relevant each party must subjectively attach different meanings to the fact in question, i.e. the "ambiguity." Where as in "Mistake" each party assents to the same fact, however, unbeknownst to them, the fact they assented to wasn't true.

Did I get that right? And, this is assuming that it is a mutual mistake, not unilateral.

[Geist13]

Misunderstanding is about a disagreement between the parties about the meaning of some aspect of the contract. Often this will affect performance. So like to change your hypothetical, we agree to a chicken. You give me a rooster. I'm like wtf, roosters are totally different than chickens. You're like no, in my town when we say chicken we mean both roosters and hens, what I have given you is indeed a chicken. The parties do not have a mutual understanding about the meaning of some aspect of the bargain.

In mistake you don't assent to the material fact. That's the whole point. It's about a "basic assumption on which the contract was made." So like you sell me a hen and I get the hen. I assumed all along that all hens are egg producing. This one isn't. I never thought to include that in the bargain. There's no assent about ability to produce eggs because it was assumed, and therefore not bargained for.

[soaponarope]

Misunderstanding is about a disagreement between the parties about the meaning of some aspect of the contract. Often this will affect performance. So like to change your hypothetical, we agree to a chicken. You give me a rooster. I'm like wtf, roosters are totally different than chickens. You're like no, in my town when we say chicken we mean both roosters and hens, what I have given you is indeed a chicken. The parties do not have a mutual understanding about the meaning of some aspect of the bargain.

In mistake you don't assent to the material fact. That's the whole point. It's about a "basic assumption on which the contract was made." So like you sell me a hen and I get the hen. I assumed all along that all hens are egg producing. This one isn't. I never thought to include that in the bargain. There's no assent about ability to produce eggs because it was assumed, and therefore not bargained for.

Thank you, thank you, thank you !!!!! Much clearer now.

[onthemoney]

[quote=]
Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case[/quote]

Arthur Miller was a voidable K, not void. If you answering the OP regarding misunderstandings (I have no clue what that is), then your obviously mistaken, because OP's saying that "misunderstanding" is void. I'd have to go with the 2nd poster, and say OP probably means misrepresentation, which still, is only voidable. The only K's that are void off the top of my head are ones that lack capacity, are illegal, or against some public policy.

[stratocophic]

What is the best way to distinguish between these two doctrines?

I know that misunderstanding there is no K (Void) and Mistake the K is (voidable).

I'm wondering though, how someone can "assent" to a material fact when the fact isn't true, i.e. A wants to purchase a Hen from B. B sells "Hen" to A. Both A and B believe it is a "Hen," but in fact it is a "Rooster." Is that a mistake? A belief that is not in accord with the facts at the time of K formation?

If so, that seems to me that it is a misunderstanding... can someone help me flesh out the distinction b/w the two doctrines. TIA.

Misunderstanding is due to an ambiguity in the terms, where 2 interpretations are reasonable. Courts might look at whether one interpretation is unreasonable and assign the party w/ that interpretation the risk. Two ships called Peerless sailing on 2 different dates is the stock example.

Mistake is based on having an incorrect belief about a basic assumption the K is based on, rather than just being a term that could be interpreted in multiple ways or have multiple meanings. E.g. a rare coin is a fake, and both parties believe it is genuine. The buyer paid more than it was worth, and the K is avoidable as a result. RS 152-154 covers it, pretty good explanations and ways to deal with it.

Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case

Ah... ok. I think I get it. So what you're saying is, in order for a misunderstanding to be relevant each party must subjectively attach different meanings to the fact in question, i.e. the "ambiguity." Where as in "Mistake" each party assents to the same fact, however, unbeknownst to them, the fact they assented to wasn't true.

Did I get that right? And, this is assuming that it is a mutual mistake, not unilateral.

Right. Another example would be contracting with an unfamiliar buyer to buy belts. You mean timing belts for your bitchin' '67 Chevy, the seller means fine Italian leather belts softened with the sadness of baby cows. Misunderstanding. Edited my previous post to clarify mistake a bit, better explanation of the difference between mutual and unilateral too.

What is the best way to distinguish between these two doctrines?

I know that misunderstanding there is no K (Void) and Mistake the K is (voidable).

I'm wondering though, how someone can "assent" to a material fact when the fact isn't true, i.e. A wants to purchase a Hen from B. B sells "Hen" to A. Both A and B believe it is a "Hen," but in fact it is a "Rooster." Is that a mistake? A belief that is not in accord with the facts at the time of K formation?

If so, that seems to me that it is a misunderstanding... can someone help me flesh out the distinction b/w the two doctrines. TIA.

Misunderstanding is due to an ambiguity in the terms, where 2 interpretations are reasonable. Courts might look at whether one interpretation is unreasonable and assign the party w/ that interpretation the risk. Two ships called Peerless sailing on 2 different dates is the stock example.

Mistake is based on having an incorrect belief about a basic assumption the K is based on, rather than just being a term that could be interpreted in multiple ways or have multiple meanings. E.g. a rare coin is a fake, and both parties believe it is genuine. The buyer paid more than it was worth, and the K is avoidable as a result. RS 152-154 covers it, pretty good explanations and ways to deal with it.

Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case

+1...but I could have written it out faster.

YOU LIE

[stratocophic]

Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case

Arthur Miller was a voidable K, not void. If you answering the OP regarding misunderstandings (I have no clue what that is), then your obviously mistaken, because OP's saying that "misunderstanding" is void. I'd have to go with the 2nd poster, and say OP probably means misrepresentation, which still, is only voidable. The only K's that are void off the top of my head are ones that lack capacity, are illegal, or against some public policy.

... No. Misunderstandings mean that the parties are not in agreement about the thing being contracted for. There can be no mutual assent, as they are agreeing to different things. A K made with a misunderstanding is void.

*Edited for quote fail

[onthemoney]

Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case

Arthur Miller was a voidable K, not void. If you answering the OP regarding misunderstandings (I have no clue what that is), then your obviously mistaken, because OP's saying that "misunderstanding" is void. I'd have to go with the 2nd poster, and say OP probably means misrepresentation, which still, is only voidable. The only K's that are void off the top of my head are ones that lack capacity, are illegal, or against some public policy.

... No. Misunderstandings mean that the parties are not in agreement about the thing being contracted for. There can be no mutual assent, as they are agreeing to different things. A K made with a misunderstanding is void.

*Edited for quote fail

The Restatement 2nd 152 (mutual mistake) for this does not say it is void, rather voidable.

[soaponarope]

Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case

Arthur Miller was a voidable K, not void. If you answering the OP regarding misunderstandings (I have no clue what that is), then your obviously mistaken, because OP's saying that "misunderstanding" is void. I'd have to go with the 2nd poster, and say OP probably means misrepresentation, which still, is only voidable. The only K's that are void off the top of my head are ones that lack capacity, are illegal, or against some public policy.

... No. Misunderstandings mean that the parties are not in agreement about the thing being contracted for. There can be no mutual assent, as they are agreeing to different things. A K made with a misunderstanding is void.

*Edited for quote fail

The Restatement 2nd 152 (mutual mistake) for this does not say it is void, rather voidable.

Onthemoney... I'm curious. How is it that you never heard of misunderstanding? Have you ever heard the term "meeting of the minds" ? Generally speaking, for a K to exist you need 4 elements; Offer, Acceptance, Consideration, and mutual assent. If you have a misunderstanding then there is no mutual assent. No mutual assent = no K, which = Void.

I'm just curious as to what you K class referred to as "mutual assent."

[motedust]

Edit: misunderstanding's fairly rare in comparison to mistake, since it requires sort of a 'perfect storm' of coincidence or ignorance by the parties to be applicable. FWIW misrepresentation's misleading the other party about a material fact, sort of like a mistake but if the mistake is intentional and meant to put the other party at a disadvantage in bargaining. Not as familiar with that one, we didn't really get to it other than that awesome Arthur Murray dancing case

Arthur Miller was a voidable K, not void. If you answering the OP regarding misunderstandings (I have no clue what that is), then your obviously mistaken, because OP's saying that "misunderstanding" is void. I'd have to go with the 2nd poster, and say OP probably means misrepresentation, which still, is only voidable. The only K's that are void off the top of my head are ones that lack capacity, are illegal, or against some public policy.

... No. Misunderstandings mean that the parties are not in agreement about the thing being contracted for. There can be no mutual assent, as they are agreeing to different things. A K made with a misunderstanding is void.

*Edited for quote fail

The Restatement 2nd 152 (mutual mistake) for this does not say it is void, rather voidable.

§ 20 of the Second Restatement of Ks says that a K made with a misunderstanding is VOID if both parties knew of the of the other's meaning or neither party knew. Misunderstanding =/= Mistake. § 152 - 154 show where Unilateral or Mutual Mistake are VOIDABLE.

edit: incomplete dashed equal sign haha

[onthemoney]

[quote/]§ 20 of the Second Restatement of Ks says that a K made with a misunderstanding is VOID if both parties knew of the of the other's meaning or neither party knew. Misunderstanding =/ Mistake. § 152 - 154 show where Unilateral or Mutual Mistake are VOIDABLE.[/quote]
So how do you reconcile the two?

[stratocophic]

§ 20 of the Second Restatement of Ks says that a K made with a misunderstanding is VOID if both parties knew of the of the other's meaning or neither party knew. Misunderstanding =/ Mistake. § 152 - 154 show where Unilateral or Mutual Mistake are VOIDABLE.

So how do you reconcile the two?

By the fact that they are 2 completely separate things. Ambiguity in terms where both parties are technically correct =/= mistaken belief where one or both parties are incorrect.

Dude you are killing me with these quotes

[motedust]

You don't reconcile the two because they are fundamentally different concepts.

[stratocophic]

So how do you reconcile the two?

Also, if you didn't learn about misunderstanding in your class and haven't taken your contracts final yet, don't trouble yourself with it. Not worth it to confuse yourself with something you don't need to know if your professor didn't teach it to you. I'd have slapped a fool trying to teach me about Statute of Frauds or something before I took my final since my professor didn't teach it.

[JCougar]

With mistake, there is assent because assent is measured objectively by the parties' outward manifestations of their intentions -- it's just that the parties have assented to something that is not true (mutual mistake), or the outward manifestation of their promise factually misrepresented their intention (unilateral mistake).

With misunderstanding, there are two different objective interpretations of one (or both) party's outward manifestation of their promise, so the parties outward manifestations of assent represented two different beliefs, even though at the time of K formation, they looked the same.

[JCougar]

In other words, assent is measured not by what the parties are thinking, but what they say they're thinking. Mutual mistake = offer and acceptance are the same, but based on something that is not true. Unilateral mistake = offer and acceptance the same, but one party misrepresented their intention.

Misunderstanding = offer and acceptance look the same, but are really different because they are two different things expressed by the same terms.

[09042014]

The way I think of it is that a mistake they are both agreeing to the same thing, they are just objectively wrong.

In misunderstanding they are not agreeing to the same thing, and they are both right but about different things.

[stratocophic]

In other words, assent is measured not by what the parties are thinking, but what they say they're thinking. Mutual mistake = offer and acceptance are the same, but based on something that is not true. Unilateral mistake = offer and acceptance the same, but one party misrepresented their intention.

Misunderstanding = offer and acceptance look the same, but are really different because they are two different things expressed by the same terms.

Not necessarily, one party could know that the other means the wrong thing and never mislead them in any way. Also would work if the party that was in the wrong had a reason to know what the other party meant but didn't through some type of negligence or other fault. One party selling their position as something other than what it really is sounds more like misrepresentation, IMO... and not just because you used the word misrepresentation

[JCougar]

In other words, assent is measured not by what the parties are thinking, but what they say they're thinking. Mutual mistake = offer and acceptance are the same, but based on something that is not true. Unilateral mistake = offer and acceptance the same, but one party misrepresented their intention.

Misunderstanding = offer and acceptance look the same, but are really different because they are two different things expressed by the same terms.

Not necessarily, one party could know that the other means the wrong thing and never mislead them in any way. Also would work if the party that was in the wrong had a reason to know what the other party meant but didn't through some type of negligence or other fault. One party selling their position as something other than what it really is sounds more like misrepresentation, IMO... and not just because you used the word misrepresentation

I think we are each giving a different meaning to the word "misrepresented." You are assuming that I meant an intentional misrepresentation, but I was really meaning a negligent or unintentional misrepresentation.

Either that, or I'm too tired to figure out what your post means...and I plead incapacity.

[stratocophic]

In other words, assent is measured not by what the parties are thinking, but what they say they're thinking. Mutual mistake = offer and acceptance are the same, but based on something that is not true. Unilateral mistake = offer and acceptance the same, but one party misrepresented their intention.

Misunderstanding = offer and acceptance look the same, but are really different because they are two different things expressed by the same terms.

Not necessarily, one party could know that the other means the wrong thing and never mislead them in any way. Also would work if the party that was in the wrong had a reason to know what the other party meant but didn't through some type of negligence or other fault. One party selling their position as something other than what it really is sounds more like misrepresentation, IMO... and not just because you used the word misrepresentation

I think we are each giving a different meaning to the word "misrepresented." You are assuming that I meant an intentional misrepresentation, but I was really meaning a negligent or unintentional misrepresentation.

Either that, or I'm too tired to figure out what your post means...and I plead incapacity.

Haha, lawyered - no need for incapacity on your part. Torts is all-consuming, who even remembers what the heck contracts was all about by now anyway

[Renzo]

There seems to be a lot of confusion in this thread.

Are we talking about mutual mistakes, mistakes of fact, misrepresentations, indefiniteness, ambiguity...