Walker contracted to sell
Sherwood a cow. The price suggested that both parties thought the cow was
barren. But the cow turned out to be pregnant, which made it worth a
whole lot more.
If the cow had been barren,
it's only worth its value in meat, which was about 1/10th the price of a
breeder.
After the contract had been
signed, and the calf had been discovered, Walker tried to back out of the
contract. Sherwood sued for replevin
(recovery of goods unlawfully taken).
Sherwood argued that the
title for the cow had already been passed, so the contract was complete.
Walker argued that the
contract was executory and
Sherwood had not been given title to the cow, so there was still time to
back out of the deal.
The Trial Court found for the
Sherwood. Walker appealed.
The Appellate Court reversed
the decision.
The Appellate Court found
that in this contract there was a mutual mistake. Neither party properly assessed the true
value of the cow.
The Court found that a
contract may be rescinded if it was made in reliance upon a mutual
mistake of fact.
Basically, the parties would
not have made the contract if they had known that the cow was a breeder.
This mistake affected the substance
of the whole consideration and it must be considered that there was no
contract to sell the cow as she actually was.
The mistake was material to the value of the cow. If, for example,
the cow was the wrong color or was missing an ear, that wouldn't affect
the value of the cow, so it wouldn't make the contract void.
This is true even if you
really really wanted a brown cow with two ears.
In a dissent, it was argued
that a general sale does not imply warranty of any quality, or the absence
of any. Since there was no warranty made in the contract, if things
didn't turn out the way people expected, that's just the luck of the draw.
The contract should still be enforced.
Basically, the dissent was
arguing that unless it specified somewhere in the contract that the cow
was barren, then if it turned out to be a breeder, it was just tough luck
for Walker.
This case is distinguished
from cases like Beachcomber Coins, Inc. v. Boskett (400 A.2d 78 (N.J. Super A.D. 1979)) and Wood
v. Boynton (25 N.W. 42 (1885)) in
that in this case, neither party ever thought that there was a possibility
the cow was fertile.
This case did not involve conscious
uncertainty.
Most Courts today almost
never uphold mutual mistakes. The
theory is that there is always a chance that you are wrong about a
material fact of the contract. That's part of the risk of making contracts.
