ContractsIntermediateDelaware Exam

What is 'mutual mistake' as a basis for rescinding a Delaware real estate contract?

AWhen both parties made a mistake about the contract price

BWhen both parties were mistaken about a material fact at the time of contracting, which may be grounds to rescindCorrect

CWhen both parties misunderstood the commission terms

DWhen both parties forgot to sign an addendum

Why When both parties were mistaken about a material fact at the time of contracting, which may be grounds to rescind Is Correct

Answer B: When both parties were mistaken about a material fact at the time of contracting, which may be grounds to rescind

Mutual mistake occurs when both parties shared an erroneous belief about a material fact at the time of contracting. If the mistake goes to the essence of the agreement, either party may seek rescission.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

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Key Terms to Know

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

Option Contract

A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.

Listing Agreement

A contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.

Math Concepts

Commission Calculation

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