Mistake (Motive, Expression)
Mistake refers to, simply put, a misunderstanding or a misconception.
Under Article 95 of the Civil Code, among these misunderstandings and misconceptions,
1) Mistake in expression (mistake on the face of the expression, mistake in the content of the expression),
2) Mistake in motive
are the two types stipulated.
Mistake in expression is a "mistake where the intention does not correspond to the expression of intention" (Article 95, Paragraph 1, Item 1 of the Civil Code).
A commonly used (I think) example is when one intended to purchase Land A for 100 million yen, but mistakenly said, "I will purchase Land B for 100 million yen."
Mistake in motive is a "mistake where the declarant's understanding of the circumstances that formed the basis of the juristic act is contrary to the truth" (Article 95, Paragraph 1, Item 2 of the Civil Code).
For example, this is the case where one said they would purchase Land A because they were convinced that a large-scale commercial building would be constructed on it, but the building was not constructed. In this case, there is a mistake regarding the motive that a large-scale commercial building would be constructed.
Another example is when one purchased a new pen because they thought they had lost their pen, but the pen they thought they had lost was actually in their bag. In this case, there is no mistake in the purchase of the pen itself, but there is a mistake in the motive of thinking the pen was lost.
If these mistakes are established, and
1) the mistake is material in light of the purpose of the juristic act and common sense in transactions (Article 95, Paragraph 1 of the Civil Code), and
2) the declarant does not have gross negligence (Article 95, Paragraph 3 of the Civil Code),
then the declarant (the person who made the mistake) can rescind it later (Article 95, Paragraph 1 of the Civil Code).
*As a general rule, the counterparty or a third party cannot rescind on the grounds of mistake.
However, this right of rescission is extinguished by prescription when:
1) it is not exercised for five years from the time when ratification became possible, and
2) 20 years have passed from the time of the expression of intention due to mistake (Article 126 of the Civil Code).
・Civil Code Article 95 Mistake
(Mistake) Article 95: A manifestation of intention may be rescinded if it is based on a mistake listed in the following items, and the mistake is material in light of the purpose of the juristic act and common sense in transactions. 1. A mistake where the intention does not correspond to the manifestation of intention. 2. A mistake where the declarant's understanding of the circumstances that formed the basis of the juristic act is contrary to the truth. (2) A rescission of a manifestation of intention under the provisions of item (ii) of the preceding paragraph may be made only if the fact that the circumstances were made the basis of the juristic act was manifested. (3) If a mistake is due to the gross negligence of the declarant, the manifestation of intention may not be rescinded under the provisions of paragraph (1), except in the following cases: 1. The counterparty knew of the mistake of the declarant or did not know of it due to gross negligence. 2. The counterparty was under the same mistake as the declarant. (4) A rescission of a manifestation of intention under the provisions of paragraph (1) may not be asserted against a third party in good faith and without negligence.
・Civil Code Article 126 Limitation on the Period of Right of Rescission
(Limitation on the Period of Right of Rescission) Article 126: A right of rescission is extinguished by prescription if it is not exercised for five years from the time when ratification became possible. The same applies when 20 years have passed from the time of the act.
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