Morton Reeves,a building subcontractor,submitted a bid for construction of a portion of a high-rise office building.The bid contained material errors in computation.Lago Corp. ,the general contractor,accepted the bid with the knowledge of Reeves' errors.Reeves:
A)must perform the contract unless he can show that Lago acted fraudulently.
B)must perform the contract according to the stated terms since his errors were unilateral.
C)can avoid liability on the contract only if his errors were not due to his negligence.
D)can avoid liability on the contract since Lago knew of his errors.

Question

Quizplus · Accepted Answer

This is an example of a unilateral mistake.Courts permit avoidance in cases of unilateral mistake if the nonmistaken party knew of the mistake or if the mistake was so obvious that the nonmistaken party had reason to realize that a mistake had been made.Since Lago had sufficient knowledge of Reeves' mistake but failed to immediately inform him about it,Reeves can avoid liability on the contract.

Morton Reeves,a Building Subcontractor,submitted a Bid for Construction of a Portion