Story Case

Howard Cameron had a cargo of mahogany for sale. He thought the mahogany was of the very best grade and he priced it according to this assumption, although he did not tell any prospective buyer that it was of the best grade. Ingersoll Bros, inspected the cargo, and concluded that it was the best. There were some negotiations in regard to the price and, finally, Ingersoll Bros,bought the cargo at a price which clearly indicated that they thought the mahogany was the best.

After the contract of sale had been completed, but before the price had been paid, Ingersoll Bros, discovered that the mahogany was not only not the best but that it was not even a good grade. They refused to pay the agreed price and, when sued for it by Cameron, set up the mistake as to quality as a defense. Is this a good defense?

Ruling Court Case. Wood Vs. Boyton, Volume 64 Wisconsin Reports, Page 265; Volume 54 American Reports, Page 610

The plaintiff in this action, Wood, found a small stone. As she was ignorant of its value, she carried it to a jewelry shop, owned and managed by Boyton, the defendant, to ascertain its actual worth. The jeweler was unable to determine immediately the value of the stone, but offered her a dollar for it. This, she refused and carried the stone away with her. Some weeks later she returned and said that she was willing to sell it for a dollar. He paid her the dollar and took the stone. Upon further investigation, the stone was found to be an uncut diamond and worth at least $700. "When Wood learned of this, she immediately demanded the return of the stone, and offered to return the dollar to Boynton. He refused to accept this offer. She then brought suit to recover the stone or its value.

Wood contended that there was a mistake as to the value of the stone; and, but for this mistake, she would never have sold it. By Boyton it was insisted that since the mistake was mutual, both as to the nature of the stone and the quality or value of it, the mistake did not affect the reality of their consent to the agreement.

Decision

Where the parties to an agreement make a mutual mistake as to the quality of the subject matter, this mistake does not render their consent unreal. It is true that one of the parties, or even both might not make the same contract, had they known all the facts, but if the agreement is entered into fairly, it is binding, even though they are seriously mistaken as to the value or the quality of the thing concerning which they contract. In this case, it appears that Boyton was just as ignorant of the quality and value of this stone as was Wood. Consequently, the contract is binding and Wood is not entitled to recover the stone or its value from Boyton.

Judgment was given for Boyton.

Ruling Law. Story Case Answer

A mutual mistake of the parties as to the quality of the subject matter concerning which they contract, does not affect their consent. The consent is real, notwithstanding the fact that they are mistaken. If one person contracts to sell something to another, the value of which is unknown to him, and the other, who is likewise mistaken as to its value, contracts to purchase the same, a binding contract results. It seems somewhat unfair in some cases that one of the parties should be benefited by such a transaction. This apparent unfairness is very conspicuous in the Court Case of Wood vs. Boyton. On the other hand, when both parties are mistaken and the contract is fairly entered into, both are taking chances. It is as likely that one as the other will suffer a loss. Because of this, the Courts seem to think it the better rule to hold that the contract is binding. In the Story Case, it appears that both parties were mistaken as to the quality of the mahogany. Such being the case, the contract is binding, notwithstanding their mistake as to its value. Therefore, Cameron may recover and the defense of Ingersoll Brothers is not good.