Legal Case Analyses and Application

Legal Case Analyses and Application

Bilateral (Mutual) Mistake -- Inkel v. Pride Chevrolet-Pontiac Inc.

In this case, the buyer relied to his substantial detriment on a mistake in calculations made by the seller with respect to the total price of the sale of a motor vehicle. Specifically, Pride miscalculated the allowable trade-in value of the used vehicle offered by Inkel toward the price of a new vehicle purchased from Pride. Subsequent to the conclusion of negotiations and payment for the vehicle, Pride demanded a substantial additional sum of money relying on a provision in its contract holding the buyer responsible for any mistake in connection with the transaction as well as on the legal doctrine that a bilateral (mutual) mistake of facts or circumstances between the parties to a contract is justification for nonperformance and rescission of the contract.

The court held that a mistake made by one party alone could not support a justification for nonperformance or rescission by the party responsible for the mistake. Moreover, the fact that the other party might have benefited from or taken advantage of the mistake was insufficient to support the contention that the mistake was mutual. The mistaken party cannot seek to rescind the contract without extraordinary circumstances such as an active role on the part of the non-mistaken party to conceal or facilitate the mistake.

This is an important concept, particularly in used car sales, because sellers could otherwise take advantage of their superior knowledge by purposely undervaluing trade-ins. If mere knowledge of the mistake by the other party were sufficient to render such mistakes "mutual" dealerships would be able to use the mileage clause in the original lease to support the mutuality of mistake theory for this purpose routinely.

Substantial Performance and Materiality of Breach -- Jacob & Youngs Inc. v. Kent

In this case, the plaintiff sought final payment for a dwelling constructed on behalf of the defendant. The defendant had refused to pay because he discovered that the plaintiff had used a different brand of piping than that specified in their contract. Through his architect-agent, the defendant had insisted that the plaintiff redo the work to replace the piping to conform to the contract. The court held that the demand was unreasonable because the difference in piping quality was nominal or negligible in the first place. Meanwhile, the costs associated with ripping apart the construction to replace the piping far exceeded the value of the difference in piping, particularly in light of the tremendous cost of the work that would entail.

This concept is important because otherwise, a party to a contract could complain, in bad-faith, anytime an immaterial fact deviated one iota from the literal content of a contract. The purpose of contractual specificity is to enable parties to reach a mutual understanding about agreements and to support good-faith claims based on breaches that are material and reasonable. Deviations from specified contractual terms are not intended to permit recoveries that grossly exaggerate the material effect of inconsequential deviations. Otherwise, parties to contracts could purposely insert highly specific clauses for the express purpose of reneging on their obligations such as by requiring the use of a particular name brand of material even where other brands are functionally identical.

Specific Performance by Virtue of Substantial Performance -- Stainbrook v. Low

In this case, the purchaser or real estate sought to enforce the specific performance of a contract for the sale real estate. Specifically, the plaintiff-buyer had entered into a valid binding contract with another party, a seller who died before the completion of the contractual obligations of the parties. Representatives of the seller's estate refused to accept payment and sought to rescind the contract. The plaintiff argued that he was entitled to specific performance because he had substantially performed his obligations and that to the extent his performance was incomplete, it was only because the defendant had refused his offer to fully perform.

The court held that the plaintiff was entitled to specific performance because he offered to fully perform his obligations as per the contract. This concept is important because otherwise, any party who wished to escape the obligations of a valid contract could simply refuse to accept payment (or refuse to allow other types of performance, such as refusing to allow a painter access to property to complete painting work on time) and then rely on that non-performance to escape the validly created contractual obligations.

Fact vs. Opinion of Parties with Superior Knowledge -- Vokes v. Arthur Murray Inc.

In this case, the plaintiff had pre-paid for thousands of hours of dance lessons from the defendant and then realized that she had wasted her money based on insincere and purposeful flattery and misstatement of fact and belief. Specifically, the defendant convinced the plaintiff that she had sufficient talent and ability to benefit from dance lessons and that, even at the age of 51, her aspirations of becoming a professional dancer were reasonable enough to justify the great expense of a long series of dance lessons.