Beachcomber Coins, Inc. v. Boskett

Superior Court of New Jersey, Appellate Division · 1979 · Contracts

400 A.2d 78 (1979)

Updated July 26, 2026

ContractsMutual mistakeRescissionAssumption of riskTrade usagecounterfeit coinbasic assumptionmaterial fact

Facts

Plaintiff, a retail coin dealer, bought from defendant, a part-time coin dealer, a dime represented and believed by both parties to be a genuine 1916 Denver-minted coin, a rarity worth far more than face value, for $500. Plaintiff's principal closely examined the coin for 15 to 45 minutes before buying it, then soon received a $700 offer subject to certification by the American Numismatic Society. That organization determined that the "D" mint mark was counterfeit, and defendant did not dispute plaintiff's trial evidence on that point. The asked and paid price was based on the shared belief that the coin was genuine.

Issue

When both buyer and seller believed a rare coin was genuine but it later proved counterfeit, may the buyer rescind the sale for mutual mistake despite having inspected the coin before purchase? Also, did the buyer assume the risk of mistake through trade custom or by contracting in the face of known uncertainty?

Rule

Where both parties enter a contract under the same mistake regarding a fact assumed as the basis of the transaction, the contract is voidable if enforcement would be materially more onerous than it would have been had the fact been as believed. Negligent failure to discover the true facts does not bar rescission. A party assumes the risk of mistake only when the parties are conscious of doubt about the pertinent fact and contract on that assumption; alleged trade usage must be shown to be regularly observed enough to justify the expectation that it governed the transaction.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

At a collectibles fair in Cleveland, Maya Ortiz sold Leo Bennett a violin bow for $18,000. Both believed it was an original 19th-century maker's bow, and the price reflected that belief; a later laboratory analysis showed it was a modern reproduction worth only a few hundred dollars.

If Leo sues to rescind the sale, which is the strongest argument for rescission?

Explanation. Rescission is proper where both parties were under the same mistake regarding a fact assumed as the basis of the transaction, and enforcement would be materially more onerous than if the fact were as believed. Here, genuineness or authenticity is an essential fact underlying the agreed price, not merely disappointed market expectations. Fraud is unnecessary. (Derived from Beachcomber Coins, Inc. v. Boskett (1979).)