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This must be an error from the PayPal API. I have added error handling for such PayPal API errors to the develop branch. (0601716)
You can download and install the latest commit and check the error message for further details.
I just updated merx from 1.7.x to 1.8.1 and when using Paypal gateway I get the following error:
Let me know how can I help you to debug this.
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