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Mutual Error of Fact

In: Business and Management

Submitted By govols1222
Words 1136
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INTRODUCTION Within this short paper several aspects of rescinding a sales contract in a situation where both parties were unaware of an associated fact in a transaction will be addressed. The scenario that was presented to the class, the prospective car buyer Josh Hartly, was interested in purchasing a new car from a local car dealer. While in the negotiating phase of the car buying process, Mr. Hartly informed the salesperson that he was looking to purchase a certain vehicle with a 3.2 liter V-6 engine and not the 3.9 liter model that was available, as he felt that the 3.2 liter engine would be more economical. Mr. Hartly signed a purchase contract for the vehicle with the 3.2 liter V-6 engine. Unbeknownst to either the salesperson or the buyer the manufacturer of the vehicle stopped manufacturing both the 3.2 liter and the 3.9 liter models and started equipping the car with a newly designed 3.5 liter engine. This paper will cover some of the impact of the above “mutual mistake” from the right of rescission, ethics, and UCC influence.
ANALYSIS
In the analysis that follows the questions that were posed to the class through the assignment will be covered more thoroughly below.
Should parties to a sales contract be able to rescind a contract because of mutual mistake of fact? As you read through the information provided in the scenario you can see that there is an implied mutual mistake that has taken place. According to Twomey & Jennings (2014), “When both parties enter into a contract under a mutually mistaken understanding concerning a basic assumption of fact or law on which the contract is made, the contract is voidable by the adversely affected party if the mistake has a material effect on the agreed exchange” (pg. 273). In this case either party could be considered the adversely affected party. Since Mr. Hartly signed an agreement to purchase the 3.2…...

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