Mutual Mistakes in Contract Law - Module Four Mutual...

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Module Four: Mutual Mistakes in Contract Law (Lisa M Iodice) For MBA-610 Business Law, Professor Ana Penn A mutual mistake of fact occurs when both parties to a contract operate under the identical misconception concerning a past or existing material fact ("Mutual Mistake," n.d.). In the example given, both Josh and the salesperson operate under the identical misconception regarding the availability of the 3.2 liter engine. I believe that parties to a sales contract should be able to rescind a contract because of a mutual mistake of fact. In our example, Josh had concerns about the fuel economy of the 3.9 liter engine, which is a valid concern and caused him to opt for the more fuel efficient 3.2 liter engine. While the newly designed 3.5 liter engine may still be more economical than the 3.9 liter engine, it may not satisfy Josh’s need for better fuel economy as the 3.2 liter engine would have. The sales person acknowledged Josh’s original concern and agreed to sell Josh a car with the 3.2 liter engine, which is what the contract was expressly written for. A mutual mistake of fact indicates that there was no intentional misrepresentation on the part of either party. Our text says in the case of a mutual mistake of fact, “the contact is voidable by the adversely affected party if the mistake has a material effect on the agreed exchange” (Twomey & Jennings, 2014). The material effect in this case is that the new engine may not meet Josh’s needs for fuel economy.
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