Mistake of Fact

Author:Jeffrey Lehman, Shirelle Phelps

Page 90

An error that is not caused by the neglect of a legal duty on the part of the person committing the error but rather consists of an unconscious ignorance of a past or present material event or circumstance or a belief in the present existence of a material event that does not exist or a belief in the past existence of a material event that did not exist.

Mistake of fact can be a factor in reducing or eliminating civil liability or criminal culpability. A mistake of fact is of little consequence unless it is born of unconscious ignorance or forgetfulness. A person cannot escape civil or criminal liability for intentional mistakes.

In contract law a mistake of fact may be raised as a defense by a party seeking to avoid liability under the contract. Also, a mistake of fact can be used affirmatively to cancel, rescind, or reform a contract. A mistake of fact can affect a contract only if the mistaken fact was material, or important, to the agreement.

For example, assume that a bookseller has agreed to sell a copy of a Virginia Woolf novel that was signed by the late author. Assume further that the buyer is only interested in buying the book because it contains Woolf's signature. The seller knows this, and with an authentic signature the book fetches a very high price. If it is later discovered that the signature was actually forged decades earlier and neither the seller nor the buyer knew of the forgery, this would be a mistake of fact material to the deal, and the buyer would have the right to return the book and get her money back. This example illustrates a mutual mistake, or a material fact that is mistaken by both parties. In such a case, the party who is adversely affected by the mistake has the right to cancel or rescind the contract.

In the event of a unilateral mistake, only one party to the agreement is mistaken about a material fact. In such a case, the party adversely affected by the mistake will not be able to void the contract unless the other party knew or should have known of the mistake, or unless the other party had a duty to disclose the mistaken fact. For example, assume that a person owns an expensive sports car that is in perfect condition. Assume further that a neighbor asks the owner if he will sell the car, and the owner responds, "I will sell this car for thirty bills." If the neighbor returns with $30, no contract is formed because the neighbor mistakenly thought...

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