Unilateral and Mutual Mistake Case: Sherwood v. Walker (1887, MI) [pp.

482-484]

Parties: Plaintiff - Sherwood Defendant - Walker Facts: P wants to buy a cow from D, and chooses one that both parties believe is barren, and thus is only worth the price of it as beef, $80. D soon discovers the cow is not barren, and is thus worth at least $750. D then refuses to sell it to P. Trial court found for P, that the contract should not be rescinded. Issue: Whether a contract can be rescinded due to a mutual mistake over the nature of the item. Yes. Holding: Reversed. Found for D (contract rescinded)

Reasoning: The cow was obviously sold for its beef, and not for its breeding value. Therefore, there was a mistake over what was bargained for - beef as opposed to a breeding cow, and so the contract should be rescinded. Also (although not in the evidence), it seems as maybe P knew of the mistake (found out the cow was with calf), and was therefore bargaining in bad faith. Dissent: The sale was made for the cow, and there was no error as to which cow. Just because it was later discovered the cow was worth more than what was bargained for does not mean that the contract should be voided. RULE: Nature of Mistake- Party excused from performance if there is a mistake about the very nature/character of the thing being bargained over. No relief if it is just a disagreement or mistaken belief over the quality or value of the object. Notes In these mistake cases, how should we allocate the risk of a mistake? Buyer beware or seller beware If mutual mistake, let parties free from obligation Who had a better opportunity to find out whether the cow was barren or not? Maybe allocate the risk to the party who could have found out the true facts. • Substance or quality? ○ Substance - because the cow to be sold was a barren cow, and it was actually a breeding cow (majority view) ○ Quality - because it was the same cow, whether it was barren or breeding (dissent)