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.
A party may avoid a contract by proving mutual mistake regarding a basic assumption underlying the contract.
There is thus no mutual mistake between the two parties named in the contract.
Because mutual consent is essential to contract formation, in the event of a mutual mistake California courts typically allow parties to reform a contract to reflect their intended agreement.
Sherwood v Walker (1887) is a landmark case in which the Michigan Supreme Court established the defense of mutual mistake.
However, LIBOR plaintiffs have not alleged mutual mistake and frustration of purpose claims.
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.
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.

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