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SCI Minnesota Funeral Services, Inc. and Corinthian Enterprises, LLC sought rescission of a share purchase agreement with Washburn-McReavy Funeral Corp.(Washburn) when they realized two previously unknown vacant properties were transferred to Washburn.
A party may not rescind a contract due to a mistake that only relates to the value of the sale.
SCI Minnesota Funeral Services, Inc. (SCI) sold three cemeteries in the form of a stock transaction to Corinthian Enterprises, LLC (Corinthian). Neither SCI or Corinthian knew that two vacant lots were included with the sale to Corinthian. Corinthian entered into a share purchase agreement with Washburn-McReavy Funeral Corp. (Washburn) where Corinthian transferred each of the properties to Washburn. SCI and Corinthian sought rescission of the share purchase agreement and stock sale agreement when they realized two previously unknown vacant properties were transferred to Washburn. Summary judgment was granted to Washburn.
Whether a party may rescind a contract due to a mistake that only relates to the value of the sale?
No. The judgment of the court of appeals is affirmed. Rescission is not warranted because the mistake only concerned the value of the shares that were transferred. Reformation is also not warranted because reformation is not available for unilateral mistakes.
A party may rescind a contract only if both parties mistook a material fact. Rescission is not warranted if there was a mutual mistake in the value of the share of the stock. Reformation is a remedy that allows parties to amend the language of a contract. Reformation is available where: (1) A valid agreement is present that reflects the parties’ true intentions, (2) a written agreement fails to express the parties’ true intent, (3) the failure is due to a mutual mistake by both parties, or a unilateral mistake caused by fraud by the other party.