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Mutual Mistakes in Contract

In: Business and Management

Submitted By orrigustafs
Words 882
Pages 4
The case:

Suppose Josh Hartly is interested in purchasing a new car and visits his local auto dealer. In the course of his negotiations, he tells the salesperson that he wants the 3.2 liter V-6 engine, and not the 3.9 liter because he has concerns regarding the fuel economy of the 3.9 liter engine. Josh signs a contract agreeing to purchase a car with the 3.2 liter V-6 engine. What neither Josh nor the salesperson knew was that the manufacturer had already stopped manufacturing both the 3.2 liter and the 3.9 liter, and was equipping the cars with a newly designed 3.5 liter engine.

What do you think about this situation? Should parties to a sales contract be able to rescind a contract because of mutual mistake of fact? Why or why not? Did either party act unethically in this case? Why or why not? What application does the UCC have here? Finally, in the overall context of contract law, are there any winners or losers when a contract is rescinded based on mutual mistake of fact? Why or why not?

A mutual mistake is when both parties incorrectly believe an important fact to be true or the applicable law to be relevant. The important facts that affect or influence a parties decision are called material facts, and if there is mutual misunderstanding of these facts means contract can be void therefore without legal effect. (John Adamson, 2011)

After looking at the facts it seems as though its is more of an error on behalf of the salesman and for me he should rescind the contract and take responsibility for the misunderstanding as it is not the consumers duty to know what engines are being manufactured. They both agreed to a contract that was created under the assumption that the 3.2 and 3.9 V6 engines were still being manufactured. If it were possible I would think that Mr. Hartly and the salesman could come to an agreement for a different purchase due the

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