USA

85 Promise to Perform a Voidable Duty see also Formation

Except as stated in § 93, a promise to perform all or part of an antecedent contract of the promisor, previously voidable by him, but not avoided prior to the making of the promise, is binding.

155 When Mistake of Both Parties as to Written Expression Justifies Reformation

Where a writing that evidences or embodies an agreement in whole or in part fails to express the agreement because of a mistake of both parties as to the contents or effect of the writing, the court may at the request of a party reform the writing to express the agreement, except to the extent that rights of third parties such as good faith purchasers for value will be unfairly affected.

156 Mistake as to Contract Within the Statute of Frauds

If reformation of a writing is otherwise appropriate, it is not precluded by the fact that the contract is within the Statute of Frauds.

157 Effect of Fault of Party Seeking Relief

A mistaken party's fault in failing to know or discover the facts before making the contract does not bar him from avoidance or reformation under the rules stated in this Chapter, unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.

158 Relief Including Restitution see also Remedies

1. In any case governed by the rules stated in this Chapter [mistake], either party may have a claim for relief including restitution under the rules stated in §§ 240 and 376.

2. In any case governed by the rules stated in this Chapter, if those rules together with the rules stated in Chapter 16 will not avoid injustice, the court may grant relief on such terms as justice requires including protection of the parties' reliance interests.

[Chapter 6 - Mistake]

Topic 5 - Restitution

197 Restitution Generally Unavailable see also Remedies

Except as stated in §§ 198 and 199, a party has no claim in restitution for performance that he has rendered under or in return for a promise that is unenforceable on grounds of public policy unless denial of restitution would cause disproportionate forfeiture.

198 Restitution in Favor of Party Who Is Excusably Ignorant or Is Not Equally in the Wrong see also Remedies

A party has a claim in restitution for performance that he has rendered under or in return for a promise that is unenforceable on grounds of public policy if

  • he was excusably ignorant of the facts or of legislation of a minor character, in the absence of which the promise would be enforceable, or
  • he was not equally in the wrong with the promisor.

199 Restitution Where Party Withdraws or Situation Is Contrary to Public Interest see also Remedies

A party has a claim in restitution for performance that he has rendered under or in return for a promise that is unenforceable on grounds of public policy if he did not engage in serious misconduct and

  • he withdraws from the transaction before the improper purpose has been achieved, or
  • allowance of the claim would put an end to a continuing situation that is contrary to the public interest.

376 Restitution When Contract Is Voidable see also Remedies

A party who has avoided a contract on the ground of lack of capacity, mistake, misrepresentation, duress, undue influence or abuse of a fiduciary relation is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance.

380 Loss of Power of Avoidance by Affirmance

1. The power of a party to avoid a contract for incapacity, duress, undue influence or abuse of a fiduciary relation is lost if, after the circumstances that made the contract voidable have ceased to exist, he manifests to the other party his intention to affirm it or acts with respect to anything that he has received in a manner inconsistent with disaffirmance.

2. The power of a party to avoid a contract for mistake or misrepresentation is lost if after he knows or has reason to know of the mistake or of the misrepresentation if it is non-fraudulent or knows of the misrepresentation if it is fraudulent, he manifests to the other party his intention to affirm it or acts with respect to anything that he has received in a manner inconsistent with disaffirmance.

3. If the other party rejects an offer by the party seeking avoidance to return what he has received, the party seeking avoidance if entitled to restitution can, after the lapse of a reasonable time, enforce a lien on what he has received by selling it and crediting the proceeds toward his claim in restitution.

381 Loss of Power of Avoidance by Delay

1. The power of a party to avoid a contract for incapacity, duress, undue influence or abuse of a fiduciary relation is lost if, after the circumstances that made it voidable have ceased to exist, he does not within a reasonable time manifest to the other party his intention to avoid it.

2. The power of a party to avoid a contract for misrepresentation or mistake is lost if after he knows of a fraudulent misrepresentation or knows or has reason to know of a non-fraudulent misrepresentation or mistake he does not within a reasonable time manifest to the other party his intention to avoid it. The power of a party to avoid a contract for non-fraudulent misrepresentation or mistake is also lost if the contract has been so far performed or the circumstances have otherwise so changed that avoidance would be inequitable and if damages will be adequate compensation.

3.In determining what is a reasonable time, the following circumstances are significant:

  • the extent to which the delay enabled or might have enabled the party with the power of avoidance to speculate at the other party's risk;
  • the extent to which the delay resulted or might have resulted in justifiable reliance by the other party or by third persons;
  • the extent to which the ground for avoidance was the result of any fault by either party; and
  • the extent to which the other party's conduct contributed to the delay.

4. If a right or duty of the party who has the power of avoidance for non-fraudulent misrepresentation or mistake is conditional on an event that is fortuitous or is supposed by the parties to be fortuitous, a manifestation of intention under Subsection (1) or (2) is not effective unless it is made before any adverse change in his situation resulting from the occurrence of that event or a material change in the probability of its occurrence.

382 Loss of Power to Affirm by Prior Avoidance

1. If a party has effectively exercised his power of avoidance, a subsequent manifestation of intent to affirm is inoperative unless the other party manifests his assent to affirmance by refusal to accept a return of his performance or otherwise.

2. A party has not exercised his power of avoidance under the rule stated in Subsection (1) until

  • he has regained all or a substantial part of what he would be entitled to by way of restitution on avoidance,
  • he has obtained a final judgment of or based on avoidance, or
  • the other party has materially relied on or manifested his assent to a statement of disaffirmance.

383 Avoidance in Part

A contract cannot be avoided in part except that where one or more corresponding pairs of part performances have been fully performed by one or both parties the rest of the contract can be avoided.

384 Requirement That Party Seeking Restitution Return Benefit

1. Except as stated in Subsection (2), a party will not be granted restitution unless

  • he returns or offers to return, conditional on restitution, any interest in property that he has received in exchange in substantially as good condition as when it was received by him, or
  • the court can assure such return in connection with the relief granted.

2. The requirement stated in Subsection (1) does not apply to property

  • that was worthless when received or that has been destroyed or lost by the other party or as a result of its own defects,
  • that either could not from the time of receipt have been returned or has been used or disposed of without knowledge of the grounds for restitution if justice requires that compensation be accepted in its place and the payment of such compensation can be assured, or
  • as to which the contract apportions the price if that part of the price is not included in the claim for restitution.

385 Effect of Power of Avoidance on Duty of Performance or on Duty Arising Out of Breach

1. Unless an offer to restore performance received is a condition of avoidance, a party has no duty of performance while his power of avoidance exists.

2. If an offer to restore performance received is a condition of avoidance, a duty to pay damages is terminated by such an offer made before the power of avoidance is lost.