Brief Fact Summary.
Defendant’s employee assumed Plaintiff needed a barge dredge for shallow digging. Plaintiff sent an employee, who knew little about dredges, to inspect the dredge. Plaintiff’s employee approved the dredge. Plaintiff sued Defendant based on mutual mistake. The trial court ruled in favor of Plaintiff. Defendant appealed.
Synopsis of Rule of Law.
A mutual mistake is one common to both parties to the contract, each laboring under the same misconception.
Equity has jurisdiction to reform written instruments in cases of mutual mistake, but a written contract will not be reformed in equity because of a mistake, in the absence of fraud, unless it is mutual; that is, common to both parties, and each under the same mistake as to its terms.View Full Point of Law
Anderson Brothers Corp. (Defendant) offered for sale a barge dredge that was designed for digging shallow trenches for burying pipeline under water. Robert O’Meara (Plaintiff) needed a dredge to dig wide, deep canals. Testimony at trial indicated that Defendant’s dredge was not suitable for Plaintiff’s purposes without expensive modifications. Plaintiff saw Defendant’s advertisement and contacted Gier, an Defendant employee. During the discussion, Gier assumed that Plaintiff needed a dredge for only shallow digging. Plaintiff then sent Kennedy, one of his employees, to inspect the dredge. Kennedy knew a lot about engines, but did not know much, if anything, about dredges. Nonetheless, Kennedy inspected the dredge and approved it for Plaintiff’s purchase. After Plaintiff received the dredge, he realized that it was not immediately suited for his purposes. Plaintiff sued based on mutual mistake, among other things. The trial court found that there was mutual mistake as to the dredge’s capabilities and awarded Plaintiff damages. Defendant appealed.
Whether a mutual mistake occurs when the parties are not mistaken about the same thing.
No. The trial court’s ruling is reversed and the case is remanded. A mutual mistake is one common to both parties to the contract, each laboring under the same misconception.
In this case, there was not mutual mistake between the parties as each party was mistaken about something different. Defendant was mistaken about for what Plaintiff was going to use the dredge, a misconception that Plaintiff clearly did not share. And Plaintiff was mistaken about the capabilities of the dredge, a misconception that Defendant did not share. Accordingly, mutual mistake did not occur. In addition, Plaintiff’s unilateral mistake as to the dredge’s capabilities is not grounds for recovery because Plaintiff did not exercise due diligence leading up to the purchase. To base a claim on unilateral mistake, a party must make an effort to ascertain facts that are reasonably ascertainable. Plaintiff’s employee, Kennedy, knew nothing about dredges, so simply sending him to inspect the dredge was not sufficient due diligence to allow Plaintiff to recover based on his mistake.