This chapter explores when error about a basic assumption can justify avoiding a contract and when the law instead assigns the risk to one party. The deliberative setting of The Council’s Mistake makes it easier to see how shared error differs from a bad bargain knowingly made.
Doctrinal map
R2d § 152 governs mutual mistake (basic assumption shared by both parties; material effect; no risk allocation against the avoiding party); R2d § 153 governs unilateral mistake (one party’s error; same elements plus unconscionability or notice of error to the other). Sherwood v. Walker (barren cow turns out fertile — substance, not value) shows mutual mistake. Wood v. Boynton (uncut diamond sold cheap — value, not substance) shows the limit. DePrince v. Starboard Cruise shows unilateral mistake in a modern snap-up setting.
Key Sources
Key Rules
- R2d § 152: Mutual mistake — voidable if basic assumption, material effect, no risk allocation
- R2d § 153: Unilateral mistake — voidable if unconscionable or other party had reason to know
- R2d § 154: Risk allocation by agreement, awareness, or court assignment
Cases
- Wood v. Boynton 64 Wis. 265, 25 N.W. 42 (1885) Mutual mistake as to the value, but not the identity, of the subject matter does not justify rescission. A sale stands when both parties were ignorant of the true nature of the thing and neither bore a duty to investigate.
- Sherwood v. Walker 66 Mich. 568, 33 N.W. 919 (1887) A mutual mistake going to the substance of the thing bargained for, not merely to its quality, renders the contract voidable. Where both parties believed a cow to be barren and she proved fertile, the mistake went to the very nature of the bargained-for animal.
- DePrince v. Starboard Cruise Services, Inc. 271 So. 3d 11 (Fla. Dist. Ct. App. 2018) (en banc) Unilateral mistake supports rescission where (1) the mistake goes to a material term, (2) enforcement would be unconscionable, (3) the mistake did not result from inexcusable lack of care, and (4) the other party can be returned to status quo. A buyer's knowledge or silence in the face of an obvious error can defeat enforcement.