The most common contract defenses are duress, unconscionability, incapacity, fraud, and the basic assumption. defenses4 of mutual mistake, unilateral mistake, impossibility, frustration of purpose and commercial impracticability. In this Article, I limit my discussion to basic assumption defenses. Several prevailing rationales explain why a party should be allowed to escape contractual liability despite the sufficiency of consideration where there has been a failure of a basic assumption material to the transaction. No single rationale or principle, however, unifies all basic assumption defenses. Several commentators have noted that similar fact patterns applying a given doctrine often yield inconsistent results. Parties’ employment of these defenses, and courts’ analyses of them, is often confusing and inaccurate.
This Article proposes that basic assumption defenses can best be explained and analyzed through the prism of contractual intent. Although typically discussed in terms of a singular concept, contractual intent in fact comprises various facets, which I refer to as volitional intent, cognitive intent, and contextual purposive intent. Part II provides an introduction to, and description of, my proposed expanded intent analysis. Part III applies expanded intent analysis to cases involving basic assumption defenses. Part IV addresses possible concerns with using a dynamic approach/expanded intent analysis. This Article concludes that adopting my proposed intent-based analysis has several advantages over the current application of contract defenses. First and foremost, it directly addresses and incorporates contract law’s two primary objectives: furthering autonomy and facilitating transactions. Second, because it removes artificial doctrinal distinctions, it eliminates or minimizes confusion and simplifies analysis. Consequently, it provides for greater consistency in judicial decisions. Finally, the approach is flexible, and therefore better accommodates technological advancements, such as the Internet, in the modern marketplace.
Nancy Kim, Mistakes, Changed Circumstances and Intent, 56 U. KAN. L. REV. 473 (2008).