Legal Question in Business Law in California

Re: Mutual Mistake Recission On A Used Automobile Contract

This is the 18-year-old-buys-his-first-car-without-getting-it-checked-out question, we get it several times a week here on LawGuru. Many young people make this mistake once, but nobody makes it more than once.

You have nothing to lose by going to court, but I am not optimistic about your odds. If you buy another used car, get the Carfax report and have a mechanic check it out before you buy, not after.

Re: Mutual Mistake Recission On A Used Automobile Contract

Did you pull a Carfax report to see if a previous accident has been reported for the car? Do that first. You may have something more than a mutual mistake/rescission claim.

Otherwise, if the previous accident would be considered a material fact, you may be able to rescind the deal based on that. However, the dealership will probably make you sue.

Feel free to call or send us an email. We will be happy to look into your case further without charge.

Re: Mutual Mistake Recission On A Used Automobile Contract

I'd say it's borderline, because mutual mistake is not the same as mutual ignorance.

If I sell you 100 shares of Amalgamated Widget Co. common stock today at $100 a share, and neither of us knows that it is broke and will file bankruptcy tomorrow, you cannot rescind the sale because the stock was really only worth 50c a share but we both were mistaken about the company's poor condition. The reason is that we weren't making a mistake, we were unaware. Lack of information is not the same as erroneous information.

On the other hand, if I intended to sell Amalgamated Widget Co. of Tennessee stock, and you thought you were buying Amalgamated Widget Co. of Kentucky, I believe that would be a perfect example of mutual mistake.

There is a famous 1887 Michigan case, Sherwood v. Walker, studied by most law students. It involved sale of a cow (Rose II of Aberlone), which was presumed to be infertile and hence worthless as breeding stock, so the parties agreed on $80. When the buyer came to pick her up a few weeks later, Rose was pregnant and hence worth at least $750. The seller refused to deliver her for $80, and the court agreed that because there was a mutual mistake as to the cow's inherent nature (a barren cow is a different critter than a fertile cow, the court reasoned).

Because so many of us have studied Sherwood v. Walker, a lot of attorneys think the principle therein is good law. However, the Michigan Supreme Court has since overruled the principle on which Sherwood v. Walker was decided, so it is now bad law and should not be relied upon.

In your case, I don't know how it should be decided and to figure it out would take a fair amount of case and law review reading. My hunch is that this is NOT an instance of mutual mistake for which rescission could be ordered under Civil Code sections 1577 and 1689(b)(1), but I could easily be wrong.

Re: Mutual Mistake Recission On A Used Automobile Contract

I would argue that the car dealer knew of should have known, failed to disclose a material fact and sue to rescind. Contact me directly.