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Divorce Settlement Agreement Rescission (Cancel, Revoke)

Pursuant to the case of Donovan v. Rrl Corp., 26 Cal. 4th 261

A party may rescind a settlement agreement if his/her consent was given by mistake. Cal. Civ. Code § 1689 (b)(1). A factual mistake by one party to a settlement agreement, or unilateral mistake, affords a ground for rescission.

Rescission is warranted when the evidence establishes that a party’s unilateral mistake of fact was made in good faith, and enforcement of the settlement agreement with the erroneous terms would be unconscionable.

A party must establish the following facts to obtain rescission of a settlement agreement: (1) the party made a mistake regarding a basic assumption upon which the party made the settlement agreement; (2) the mistake has a material effect upon the agreed exchange of performances that is adverse to the party; and (4) the effect of the mistake is such that enforcement of the settlement agreement would be unconscionable.

In establishing a material mistake regarding a basic assumption of the settlement agreement, the party must show that the resulting imbalance in the agreed exchange is so severe that it would be unfair to require that party to perform. Ordinarily, a party can satisfy this requirement by showing that the exchange not only is less desirable for the party, but also is more advantageous to the other party.

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