Also known as: avoidance power · avoiding power · avoiding powers · avoidance
Written by attorneys · grounded in primary & secondary sources — see below
A party's right to rescind a contract on grounds such as mistake, misrepresentation, duress, or lack of capacity and to obtain restitution of benefits conferred.
Aaron Adams contracted with Alliance Holdings to supply parts under a pricing formula both parties believed would track costs. When electricity prices spiked and the formula produced a massive loss for Aaron, he sought to avoid the contract. Because his failure to discover the formula's flaw did not amount to bad faith, the court permitted avoidance and ordered restitution of benefits exchanged.
Abigail Alvarez bought a car from Apex Dynamics under a contract containing a broad warranty disclaimer. After the vehicle repeatedly failed, Abigail proved the disclaimer was unconscionable. The court allowed her to avoid the contract and recover the purchase price paid.
Select any source to read its text and confirm it supports the definition.
Andre Antoine signed a release after the other party threatened baseless litigation that would ruin his business. Because the threat constituted duress, the court permitted Andre to avoid the release and recover the consideration he had paid.
Anita Ali contracted to buy equipment under a pricing term both parties mistakenly believed reflected current market rates. Upon discovering the error, Anita avoided the contract. The court ordered restitution of payments made and return of the equipment.
Albert Allen contracted with Avalon Pharmaceuticals using a price index both sides assumed would reflect costs. When the index failed to capture major cost increases, Albert invoked avoidance. The court ordered restitution of benefits conferred to prevent unjust enrichment.
No. A mistaken party's fault in failing to know or discover facts does not bar avoidance unless the fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.
Supporting sources
A party who avoids a contract is entitled to restitution for any benefit conferred on the other party through part performance or reliance. The avoiding party must generally return any benefit received.
Supporting sources
The power is lost if the party does not manifest an intention to avoid within a reasonable time after learning of the mistake or misrepresentation, or if the contract has been so far performed that avoidance would be inequitable and damages are adequate.
Supporting sources
…objective index of ALCOA’s non-labor production costs, and that their mistake is legally sufficient to warrant modification or avoidance of ALCOA’s promise. Essex appropriately raised several defenses to these claims. Essex first argues that the asserted mistake is legally insufficient because it is essentially a mistake as…