Part 4: Part 4: Validity
Article 32 - Initial impossibility(1) The mere fact that at the time of the conclusion of the contract the performance of the obligation assumed was impossible does not affect the validity of the contract.(2) The mere fact that at the time of the conclusion of the contract a party was not entitled to dispose of the assets to which the contract relates does not affect the validity of the contract.
Article 33 - Relevant mistake(1) Mistake is an erroneous assumption relating to facts or law existing when the contract was concluded.(2) A party may only avoid the contract for mistake if:(A) the mistake relates to the existence of the subject matter of the contract, the identity the subject matter, the possibility of performing the contract, or the quality or quantity of the subject matter;(B) when the contract was concluded, the mistake was of such importance that a reasonable
Personin the same situation as the party in error would only have concluded the contract on materially different terms or would not have concluded it at all if the true state of affairs had been known; and(C) either:(i) the other party made the same mistake, or caused the mistake, or knew or ought to have known of the mistake and it was contrary to reasonable commercial standards of fair dealing to leave the mistaken party in error; or(ii) the other party had not at the time of avoidance acted in reliance on the contract.(3) However, a party may not avoid the contract if it was grossly negligent in committing the mistake or the mistake relates to a matter in regard to which the risk of mistake was assumed or, having regard to the circumstances, should be borne by the mistaken party.
Article 34 - Remedies for non-performance
A party is not entitled to avoid the contract on the ground of mistake if the circumstances on which that party relies afford, or could have afforded, a remedy for non-performance.
Article 35 - Misrepresentation(1) A party may avoid the contract when it has been led to conclude the contract by a material misrepresentation by the other party.(2) Misrepresentation is an inducement to enter into a contract by a statement which is misleading.
Article 36 - Threat
A party may avoid the contract when it has been led to conclude the contract by the other party's unjustified threat which, having regard to the circumstances, is so imminent and serious as to leave the first party no reasonable alternative. In particular, a threat is unjustified if the act or omission with which a party has been threatened is wrongful in itself, or is wrong to use it as a means to obtain the conclusion of the contract.
Article 37 - Illegality
A party may avoid the contract if the contract would result in a breach of the
QFC Lawor any Regulationsor rules made pursuant thereto or would be illegal under any of the mandatory or criminal laws of the Stateor other state where the obligations are to be performed.
Article 38 - Confirmation
If the party entitled to avoid the contract expressly or impliedly confirms the contract after the period of time for giving notice of avoidance has begun to run, avoidance of the contract is excluded.
Article 39 - Loss of right to avoid(1) If a party is entitled to avoid the contract for mistake but the other party declares itself willing to perform or performs the contract as it was understood by the first party, the contract is considered to have been concluded as the first party understood it. The second party must make such a declaration or render such performance promptly after having been informed of the manner in which the first party had understood the contract and before the first party has acted in reliance on a notice of avoidance.(2) After such a declaration or performance the right to avoidance is lost and any earlier notice of avoidance is ineffective.
Article 40 - Notice of avoidance
The right of a party to avoid the contract is exercised by notice to the other party.
Article 41 - Time limits
Notice of avoidance shall be given within a reasonable time, having regard to the circumstances, after the avoiding party knew or could not have been unaware of the relevant facts or became capable of acting freely.
Article 42 - Retroactive effect of avoidance(1) Avoidance takes effect retroactively.(2) On avoidance either party may claim restitution of whatever is supplied under the contract or the part of it avoided, provided that he concurrently makes restitution of whatever he has received under the contract or the part of it avoided or, if he cannot make restitution in kind, he makes an allowance for what it has received.
Article 43 - Damages
Irrespective of whether or not the contract has been avoided, the party who knew or ought to have known of the ground for avoidance is liable for damages so as to put the other party in the same position in which he would have been if he had not concluded the contract.
Article 44 - Mandatory character of the provisions of Part 4
The provisions of this Part 4 are mandatory.