Donovan v. RRL Corp.

Brief Fact Summary.

Donovan is suing RRL Corp. (RRL) for breach of contract when a newspaper mistakenly advertised the sale of a car owned by RRL at a lower price.

Synopsis of Rule of Law.

A party is not required to follow through with a contract if he made a good faith mistake regarding a material fact of the agreement and the contract would result in a loss to that party.

Facts.

Donovan is suing RRL Corp. (RRL) for breach of contract when a newspaper mistakenly advertised the sale of a car owned by RRL at a lower price. Donovan attempted the purchase the vehicle at the advertised price but was rejected by RRL. The trial court granted judgment to RRL and the appellate court reversed.

Issue.

Whether a party is required to follow through with a contract if he made a good faith mistake regarding a material fact of the agreement and the contract would result in a loss for that party?

Held.

No. The judgment of the court of appeals is reversed. RRL is allowed to rescind the contract because it would be unconscionable for RRL to suffer such a great loss for such a minor mistake. The mistake in the advertisement was made in good faith and customers cannot always expect accuracy for prices listed in advertisements.

Discussion.

To get out of a contract, a party claiming unilateral mistake must prove: (1) the mistake was an assumption of the agreement, (2) the mistake affects the value of the agreement, (3) the defendant did not assume the risk of the mistake, (4) it would be substantively unconscionable to enforce the contract due to the mistake.