True or false: Misrepresentations and mistakes affect the validity of a contract.

Misrepresentations and mistakes can indeed affect the validity of a contract. A misrepresentation occurs when one party provides false information that induces another party to enter into the contract. This could be an intentional lie or an unintentional error regarding a material fact. When a party relies on this incorrect information, the contract may be voidable, meaning that the deceived party has the option to withdraw from the contract and potentially seek damages.

Similarly, mistakes—whether mutual (both parties are mistaken about a fundamental fact) or unilateral (only one party is mistaken)—can also impact the contract's validity. If a mutual mistake exists regarding a fundamental aspect of the agreement, the contract may be considered void because neither party has a clear understanding of what is being agreed upon. In cases of unilateral mistakes, the affected party might have recourse, especially if the other party knew or should have known about the mistake.

Understanding these concepts is critical for anyone involved in contract law, as they highlight how the integrity of information and mutual understanding are paramount to forming valid and enforceable agreements.