Citations (1)


Footnotes (101)



Mutual Misunderstanding in Contract

Benjamin Alarie

University of Toronto - Faculty of Law


American Business Law Journal, Vol. 46, No. 4, pp. 531-572, 2009

It is accepted throughout the common law that agreements founded on a mutual misunderstanding are void ab initio. It follows from this that unenforcement is necessary and inevitable; indeed, there is simply no contract to enforce. Curiously, however, in cases involving mutual misunderstanding the parties themselves usually believe and behave as if they have settled upon a knowable and enforceable agreement from the outset. It is typically only sometime later that the mutual misunderstanding between the parties comes to light. In this article I question the wisdom of the widely accepted common law rule surrounding mutual misunderstanding. I present and defend an alternative legal rule that significantly improves upon the efficiency of the results in cases involving mutual misunderstanding. The rule I propose would allow each party to an agreement founded on mutual misunderstanding to have the option to enforce his or her reasonable understanding of the agreement vis-a-vis the other party. This rule can be shown to preserve the reasonable expectations of the parties, promote reliance on promises, and provide implicit insurance against the risk that a mutual misunderstanding will interfere with the realization of expected contractual surplus.

Number of Pages in PDF File: 42

Open PDF in Browser Download This Paper

Date posted: June 11, 2008 ; Last revised: December 7, 2009

Suggested Citation

Alarie, Benjamin, Mutual Misunderstanding in Contract (2009). American Business Law Journal, Vol. 46, No. 4, pp. 531-572, 2009. Available at SSRN: http://ssrn.com/abstract=1142941

Contact Information

Benjamin Alarie (Contact Author)
University of Toronto - Faculty of Law ( email )
84 Queen's Park Blvd
Toronto, Ontario M5S 2C5
416-946-8205 (Phone)
416-978-7899 (Fax)
HOME PAGE: http://www.law.utoronto.ca/faculty/alarie/

Feedback to SSRN

Paper statistics
Abstract Views: 2,837
Downloads: 416
Download Rank: 46,907
Citations:  1
Footnotes:  101

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.453 seconds