Fraud also makes a contract void. Fraud occurs when one party lies or misrepresents an important part of a contract to the other party. An example would be a car owner s rolling back the odometer of a used car and claiming the car has been driven 30,000 miles rather than the actual 60,000 miles. However, a fine line exists between fraud and a seller s opinion of the subject of the contract, known as sales puffing, which does not void a contract. Determining whether fraud or sales puffing occurred in contract defense can be difficult and usually has to be interpreted in court.
Mistakes do happen in negotiating and signing contracts.
Some mistakes can void a contract, while others may not. A buyer s mistaken impression is not the seller s fault, unless the seller knows of the false impression and does not correct the information. The best way to avoid this situation as a buyer is never to assume anything, but to ask questions. If both sides of the contract have incorrect information, known as a mutual mistake, the court will often set aside a contract. The mistake puts both buyer and seller at a disadvantage and voiding the contract is in everyone s best interest.