Mutual Mistake

Mutual Mistake

An error of both parties to a contract, whereby each operates under the identical misconception concerning a past or existing material fact.

For example, a customer goes to the sample room of an interior decorator to select a carpet and asks the clerk to show him a navy carpet, which he subsequently purchases and takes with him. The sales slip notes that the carpet purchased is navy. When, upon examining the carpet in daylight, the customer discovers that it is black, not navy as he thought when he bought it, a mutual mistake would have occurred, since both the seller and buyer were in error concerning the correct color of the carpet sold. Since there had never been a true and complete meeting of the minds, no mutual assent was actually arrived at, and the buyer would be entitled to return the carpet and obtain a full refund.

References in classic literature ?
Small wonder we had conversed at cross-purposes; the only wonder was that we had not discovered our mutual mistake.
Taxpayers are denied a discharge of federal taxes in bankruptcy because they failed to timely file Forms 1040; the IRS's assessments are not time-barred after the Tax Court finds mutual mistake and reforms extension agreements to correct a "scrivener's error.
2 billion buyout should proceed despite a mutual mistake as to price.
Sherwood v Walker (1887) is a landmark case in which the Michigan Supreme Court established the defense of mutual mistake.
According to the Supreme Court of Rhode Island, when parties to a marital settlement agreement rely on an expert appraisal, the court will not permit reformation of the agreement unless a mutual mistake of material fact is established by clear and convincing evidence.
A party may avoid a contract by proving mutual mistake regarding a basic assumption underlying the contract.
The defendant's claim "sought reformation of the parties' written agreement claiming a mutual mistake, or alternatively, a rescission of the written agreement and enforcement of the parties' earlier oral agreement.
24) A board or court can reform a contract when there has been a unilateral mistake, mutual mistake, or when a contract violates a statute or agency regulation.
He believes the claim could set a precedent, because the global crisis and inability of buyers to get mortgages gave rise to what he says is a mutual mistake and impossibility of performance, creating grounds under state law for contract rescission.
In addition to some reorganization of the topics within the text, the third edition includes discussion of the enforcement of form contracts, the role of formal contracts in contract law, and articles on mutual mistake.
The black letter criteria for reformation is a written agreement, (5) a mutual mistake (6) (or fraud, or misrepresentation by a party and a mistake by the other party), (7) and proof by clear and convincing evidence.
The regulations under section 7122 provide for reopening an offer if there is a mutual mistake as to a material fact.

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