Mutual Mistakes

Topics: Contract / Pages: 3 (598 words) / Published: Aug 1st, 2013
Mutual Mistakes in Contract Law

4-3 Mutual Mistakes in Contract Law

Southern New Hampshire University


In contractual law, a mutual mistake is: “Where a mistake of both parties at the time of contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in 154.” (Rasmusen, 1993)

4-3 Mutual Mistakes in Contract Law
This case is a perfect example of mutual mistake since both parties were ignorant to the proper facts. Josh Hartly and the salesperson were both uninformed of the fact that a 3.2 liter V-6 engine was no longer manufactured by that manufacturer, thus making them parties to a mutual mistake contract.
What do you think about this situation?
Josh wanted the salesperson to show him a vehicle with an engine that was no longer being manufactured. Since Josh and the salesperson did not know that this arrangement would be impossible and had a contract been formed, I feel that it would have been completely voidable.

Should parties to a sales contract be able to rescind a contract because of mutual mistake of fact? Why or why not?
After researching the web and reading relevant court cases, I believe that parties to a sales contract that is based on a situation of mutual mistake should in fact be able to rescind. In the famous Michigan case of Sherwood v. Walker, this very topic was at hand. Sherwood had bought a cow from Walker under the pretense that it was a barren cow. “Sherwood agreed to purchase the cow for $80. If the cow had been fertile it would have been worth $750 to $1000. Walker later discovered that the cow was with calf and refused to complete the transaction.” (Sherwood v. Walker, n.d.) Though the case was won by Sherwood and he was allowed to keep the cow, it was later reversed because, ”the mistake went to the whole

References: Rasmusen, E (1993). Mutual and unilateral mistake in contract law, 22 Journal of legal studies 309, Retrieved from Sherwood v. Walker (n.d.). Retrieved on July 12th, 2013 from

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