4 3 Mutual Mistakes BL
4-3 Mutual Mistakes in Contract Law
Business Law
“The common-law origin of the mutual mistake doctrine in the United States is Sherwood v. Walker. Walker (a breeder) sold Sherwood (a banker) Rose 2d of Aberlone (a cow) at a low price on the basis of the parties’ mutual belief that the cow was barren. When Walker discovered the cow was pregnant and, therefore, more valuable, he refused to deliver. Sherwood sued to have the contract enforced. The trial court judgment in favor of Sherwood was reversed on appeal” (Smith, J. K., & Smith, R. L., 1990, pg. 469).
When parties enter into a contractual agreement and that agreement reflects false or no longer valid information or terms, unbeknownst to the parties, it is a mutual mistake. However, when considering mutual mistakes in regards to contract law, we must keep in mind that the remedy for such a mistake is not always rendering the contract voidable. There are several factors that must be considered before a contract of mutual mistake can be revoked. The mistake must be the primary reason that both parties initially entered into the contract, the mistake must have such an impact on the agreement that it essentially becomes completely new, and there is no mutual mistake if either party knew that there was a probability of mistake when the contract was signed. The validity and rescission of the contract depends on how these three elements are applied to each instance of mutual mistake.
In the scenario provided, Mr. Hartly entered into a purchasing agreement with the auto dealership in order to buy a car. Unfortunately, neither Mr. Hartly nor the dealership recognized their mistake when seeking to procure a car with a 3.2 liter V-6 engine. The failure of both parties to recognize that the contracted item was no longer available makes this a clear instance of mutual mistake, however whether the contract should be completely voided or reformed requires further examination.
The first element that must be considered
Business Law
“The common-law origin of the mutual mistake doctrine in the United States is Sherwood v. Walker. Walker (a breeder) sold Sherwood (a banker) Rose 2d of Aberlone (a cow) at a low price on the basis of the parties’ mutual belief that the cow was barren. When Walker discovered the cow was pregnant and, therefore, more valuable, he refused to deliver. Sherwood sued to have the contract enforced. The trial court judgment in favor of Sherwood was reversed on appeal” (Smith, J. K., & Smith, R. L., 1990, pg. 469).
When parties enter into a contractual agreement and that agreement reflects false or no longer valid information or terms, unbeknownst to the parties, it is a mutual mistake. However, when considering mutual mistakes in regards to contract law, we must keep in mind that the remedy for such a mistake is not always rendering the contract voidable. There are several factors that must be considered before a contract of mutual mistake can be revoked. The mistake must be the primary reason that both parties initially entered into the contract, the mistake must have such an impact on the agreement that it essentially becomes completely new, and there is no mutual mistake if either party knew that there was a probability of mistake when the contract was signed. The validity and rescission of the contract depends on how these three elements are applied to each instance of mutual mistake.
In the scenario provided, Mr. Hartly entered into a purchasing agreement with the auto dealership in order to buy a car. Unfortunately, neither Mr. Hartly nor the dealership recognized their mistake when seeking to procure a car with a 3.2 liter V-6 engine. The failure of both parties to recognize that the contracted item was no longer available makes this a clear instance of mutual mistake, however whether the contract should be completely voided or reformed requires further examination.
The first element that must be considered