Sherwood v. Walker

Michigan Supreme Court · 1887 · Contracts

Contractsmutual mistakerescissionmaterial mistakebasic assumptionmutual mistakerescissionmaterial fact

Facts

Defendants, importers and breeders of cattle, sold plaintiff the cow Rose 2d of Aberlone at a price per pound after both parties believed she was barren and would not breed. Defendants sent a signed letter confirming the sale and an order directing their agent to deliver the cow and have her weighed, but before delivery they learned from the agent that the cow appeared to be with calf and then refused delivery. Evidence showed the cow, if barren, was worth about $80, but if a breeder was worth $750 to $1,000; she later had a calf. Plaintiff sued in replevin after tendering payment and being refused the cow.

Issue

Whether defendants could rescind the sale and refuse delivery when both parties contracted under the belief that the cow was barren, but she was in fact capable of breeding. Also, whether that mistake was merely about quality or instead went to the substance of the thing bargained for.

Rule

A party may refuse to execute or may avoid a contract of sale if the assent was founded on a mutual mistake of a material fact, such as the subject matter of the sale, the price, or another collateral fact materially inducing the agreement. If the mistake concerns the substance of the whole contract and goes to the root of the matter, there is no contract; if it concerns only some quality or accident of the thing, the contract remains binding.

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

In Lexington, Kentucky, Nora Benton agreed to buy a mare from Blue Hollow Stables for $900 after both Nora and the stable manager believed the mare had been permanently sterilized by an injury and was useful only for trail riding. Before delivery, a veterinarian confirmed that the mare was in fact fully fertile and valuable as breeding stock worth many times the agreed price.

If Blue Hollow Stables refuses delivery and seeks to avoid the deal, which is the strongest argument under the governing rule?

Explanation. A sale may be avoided when both parties assent under a mutual mistake of a material fact that goes to the substance or very nature of the thing bargained for. A supposedly sterile riding animal is substantially different, for business purposes, from a fertile breeding animal. The majority distinguished such a mistake from a mere mistake about quality or accident.