Contracts - Misunderstanding and Mistake

Wood v. Boynton; 152; 154

D owned jewelry store and P had a stone that she didn't know the value or nature of. D bought it for $1, but it ended up being worth $700, so P tried to get D to give it back to her. Under R2d _____, there was a mistake of both parties at the time the contract was formed, it was a mistake of basic assumption, and it had a material effect. However, the court said that P bore the risk since she had limited knowledge of the facts of the stone, so the court enforced the contract under R2d ______.

Raffles v. Wichelhaus; material

P agreed to send cotton on a ship called the Peerless, but there were two ships called this arriving at two different times. D thought it arrived in October, P thought it was the ship arriving in December. There were different _____ meanings attached by the parties, so there was no contract.

Anderson Brothers v. O'Meara

P bought dredge for a purpose it was unknowingly not made for and claims mutual mistake. However, two misconceptions does not equal a mutual mistake. D did not know of the mistaken belief of the plaintiff, so the court found that P assumed the risk under 154 because he had limited knowledge by sending an employee to D's office who knew nothing about dredges to check it out before the purchase.

Jaynes v. Louisville & Nashville Railroad

P signed waiver saying he would release all claims against D that may arise from an accident he had while being employed by them, but the injuries ended up being way more severe than both thought at the time the contract was formed, making it a mistake of basic assumption that had a material effect. The contract said nothing about P assuming the risk of present and future unknown injuries, so the court did not enforce the contract.

153; unilateral

R2d ____: When all requirements are met under R2d 152 and 1) the effect of the mistake is such that the enforcement of the contract is unconscionable or 2) the other party had reason to know of the mistake or his fault caused the mistake, then the contract is not enforceable. This is known as a ______ mistake.

154

R2d _____: A party bears the risk of a mistake when 1) the risk is allocated to him by agreement of the parties, 2) he's aware he has limited knowledge, or 3) the court says so based on reasonable circumstances.

20; misunderstanding

R2d _____: There is a _________ and therefore no mutual assent to an exchange if the parties attach materially different meanings to their manifestations. Neither party knows nor has reason to know the meaning attached by the other.

152; mistake

R2d ______: A mutual ______ of both parties at the time the contract was formed that was made on the basic assumption of the contract and had a material effect on the agreed exchange of performance will void the contract. However, a party can't get out of the contract if they bear the risk of discovering that mistake beforehand.

Sherwood v. Walker

Sale of a cow that both parties thought was barren, but ended up having a calf which drastically affected the cow's value. The court rescinded the contract because both parties made the mistake at the time the contract was formed, made the mistake on the basic assumption of the contract, and the mistake had a material effect on the agreed exchange of performance.

formation; enforcement

A misunderstanding is a _______ defense, and a mistake is an _______ defense.