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No. IV.7.3 - Right to avoid the contract for mistake in fact or law
(a) A party may avoid a contract retrospectively based on a mistake of fact or law existing at the moment the contract was concluded if:
the mistake was caused by information given by the other party, or
the other party knew or ought to have known of the mistake and it was contrary to good faith and fair dealing to leave the mistaken party in error
the other party made the same mistake
provided that the other party knew or ought to have known that a reasonable party in the same situation as the party in error would not have entered into the contract or would have concluded the contract on materially different terms.
(b) A party's right to avoid the contract for mistake is excluded if
the risk was assumed, or, under the particular circumstances, should be borne by it,
it was grossly negligent in committing the mistake, or if
the party, being aware of and reasonably capable of enforcing such a right, manifests an intention to confirm the transaction.
(c) Avoidance is effected by notice to the other party.
(d) Where the party who has the right to avoid a contract under this Principle confirms it, expressly or impliedly, after becoming aware of the relevant circumstances, or becoming capable of acting freely, that party may no longer avoid the contract.
This document is cited by:TransLex-List of Lex Mercatoria -Principles, No. IV.7.4 - Right to avoid the contract for fraudulent misrepresentation
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