Is mistake strong enough to cancel a contract according to Ethiopian Law?
If you want to know if a mistake in a contract can be strong enough to cancel it according to Ethiopian law you might want to read this.
A mistake in an everyday life is inevitable. likewise it is natural to make mistakes when writing a contract. There might be minor or major mistakes involved in a contract. The minor mistakes can be corrected easily. But as for the major ones can be strong enough to cancel a contract.
Of course, the mistake must be Decisive and Fundamental to be considered as a major one. The mistake to be a major mistake that can invalidate a contract should fulfill the cumulative requirements of Decisiveness and Fundamentality.
When a mistake is Decisive it is to say where a mistaken party would not have entered into the contract had he known the truth.
Fundamental Mistake relates to the fundamental elements of the contract. It might be concerning the nature or object of the contract or it might even be concerning the identity or qualification of the contracting parties.
To illustrate the above paragraph let’s take the following examples.
If a party enters into a contract believing that the nature of the Contract of Sale but the contract is actually Contract of Lease, it means he hasn’t understood the nature of the contract when entering into the agreement.
In an another case, if a mistaken party has undertaken to make a performance substantially greater than or to receive a substantially smaller amount than he intended then we say the contracting party did not get the object of the contract. We can take an example of a person selling a Mercedes Benz thinking it is his old Beetle Volkswagen.
A mistake might also occur as for the Identity or Qualification of a Contracting Party you might have concluded a contract in consideration of a certain person. For an instance if you concluded a contract will an accountant not knowing that he has a criminal history of embezzlement or forgery of documents.
As said earlier mistakes can be minor or major. We have discussed major mistakes that can invalidate contracts above. Now let us see how the law treats the minor mistakes in a contract.
Mistakes like the Motive which led to the making of the contract are minor mistakes that cannot invalidate a contract. For example, if a man rents a hall for his wedding day and if the wedding is canceled for whatever reasons it can not affect the contract. The man should pay the agreed amount for the rental.
Arithmetic Mistakes are also minor mistakes which can be easily corrected for instance, the parties have agreed on the amount of a cretin item but have made calculation errors which writing the contract this can be corrected when they the parties com to know of the mistake. So, in the above kind of cases the mistakes can not invalidate the contract.
One important point that we have to keep in mind is that for a mistake to invalidate a contract it must be invoked in Good Faith. Mistake shouldn’t be invoked in bad faith. If one involves a mistake to avoid the effect of a contract then he shall repair the damage arising out of the invalidation of the contract. However, this cannot apply where the other party knew or should have known the mistake for instance, if a gold expert buys a fake gold.
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