The legal consequences of mistake in contractual transactions when it has effect but does not totally prevent the formation of a contract may be classified under three headings:

1. Reformation of the contract.

2. Rescission of the contract, which may involve merely freedom from liability, or may also involve a right of restitution either in specie or in money equivalent.17

3. Refusal of specific performance.

Mistake in order to have the effect last referred to need not fulfil the requisites for the affirmative relief of reformation or rescission, as the remedy of specific performance is said to be discretionary. This aspect of the subject has already been discussed,18 and attention here may be confined mainly to cases where reformation or rescission is in question. Either of these remedies generally implies the existence either of a contract or a conveyance to be reformed or rescinded; but often the possibility of injury from a written instrument though it is wholly invalid, will justify relief. Something should be said also of the right to recover property transferred, or its value, where the transfer was made on the erroneous assumption that a contract or bargain had been made.

Sec.1543. Kinds Of Mistake - Compromise

Mistake has now been considered with reference to its effects upon a contract or sale, and also according to the remedy afforded by the law.

16 See supra, Sec.Sec. 20,94, 95, 95a.

17 It may thus involve reviving an obligation which by mistake has been discharged. In the following cases mortgages discharged by mistake were revived: Geib v. Reynolds, 35 Minn. 331, 28 N. W. 923; Hutchinson v. Swartsweller, 31 N. J. Eq. 205; Mc-Kenzie v, McKenzie, 52 Vt. 271. 18 See supra, Sec. 1425.

It next becomes necessary to define the kinds of mistake which produce the various effects referred to and entitle either or both parties to the remedies spoken of. The misunderstanding which renders an agreement void, has been considered previously.19 It remains therefore to consider what mistakes render contractual transactions voidable; and in what cases, if any, a mutual mistake as distinguished from a misunderstanding renders an agreement void, and to distinguish these cases from those where mistake has no legal effect.

In the first place there must be excluded from consideration mistakes as to matters which the contracting parties had in. 'mind as possibilities and as to the existence of which they took the risk. Thus where a compromise is made, the fact that one or both parties was under a mistake in regard to the claim which was the subject of compromise, affords no ground for relief.20 It should be observed, however, that even a compromise may be based on the assumed existence of some fact.21 The term compromise involves the conclusion that the parties assumed some question of fact or law was in dispute between them; but not necessarily all questions essential to the rights of the parties.

Moreover, the kind of mistake necessary to justify reformation must be distinguished from that required as a basis for rescission. If a writing does not contain what the parties had agreed or intended it should, the defect will be rectified unless too trivial to deserve the court's attention. But in order to justify rescission, the mistake must relate to an essential matter, since it is better to leave the parties with a contract approximating what they would have wished than with none;

19 Supra, Sec.Sec. 94, 96.

20 Stewart v. Stewart, 6 CI. & F. 911; Carlisle v. Barker, 57 Ala. 267; Troy v. Bland, 58 Ala. 197; Morris v. Mun-roe, 30 Ga, 630; Tyson v. Woodruff, 108 Ga. 368, 33 8. E. 981; Stover v. Mitchell, 45 111. 213; New York; life Ins. Co. v. Chittenden, 134 la. 613, 112 N. W. 96, 11 L. R. A. 233, 120 Am. St. Rep. 444; Lamb v. Rathburn, 118 Mich. 666, 77 N. W. 268; Graham v. Meyer, 99 N. Y. 611, 1 N. E. 143;

Seare v. Grand Lodge, 163 N. Y. 374, 57 N. E. 618, 50 L. R. A. 204; Consolidated Fruit Jar Co. v. Wisner, 103 N. Y. App. Div. 453, 93 N. Y. S. 128; Lies v. Stub, 6 Watts, 48; Natcher v. Natcher, 47 .Pa. 498; Bergentbal v. Fiebrantz, 48 Wis. 435, 4 N. W. 89, and see cases"supra, 136-137.

91 Rheel v. Hicks, 25 N. Y. 289; Trigg v. Read, 5 Humph. 529, 544, 42 Am. Dec. 447; Meiuecke v. Sweet, 106 Wis. 21, 81 N. W. 986.

unless in case the mistake is induced by misrepresentation of the other party. Any fact misrepresented which might naturally operate and did operate to induce the bargain will justify relief.22 But where neither party to the transaction is in fault for the other's error a stricter rule is applicable.