This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Under some statutory provisions, relief may be given in equity against an honest mistake of law as to the effect of the instrument on the part of both contracting parties if such mistake operates as a gross injustice to one and gives to the other an unconscionable advantage.31 Under such a statute equity will give relief if one who understands that he is entering into a contract of compromise, signs the instrument which as worded is without meaning.32 Mistake as to the authoritv of an executor named in a will to execute a power conferred upon the trustee named in the will may be ground for equitable relief.33
25EIdridge v. R. R., 88 Me. 191, 33 Atl. 974.
26 Berks & Dauphin Turnpike Road v. American Telegraph & Telephone Co., 240 Pa. St. 228, 87 Atl. 580.
27 Mackin v. Dwyer, 205 Maes. 472, 91 N. E. 893; Kirkland v. Moseley, - S. Car. - , 96 S. E. 608.
28 Mackin v. Dwyer, 205 Mass. 472, 91 N. E. 893.
If an employer is mistaken as to his rights under the Workmen's Compensation Law, and enters into a compromise under such mistake, no relief will he given to him. Bach v. Interurban ry. Co., - la. - , 171 N. W. 723.
29Errett v. Wheeler, 109 Minn. 157, 26 L. R. A. (N.S.) 816, 123 N. W. 414.
30Silander v. Gronna, 15 N. D. 552, 125 Am St. Rep. 616, 108 N. W. 544.
Under some statutes, relief will he given for a mistake of law on the part of one party, of which the other knowingly takes advantage. Hellebust v. Bonde, - N. D. - , 172 N. W. 812.
31Dolvin v. American Harrow Co., 125 Oa. 699, 28 L. R. A. (N.S.) 785, 64 S. E. 706.
32Dolvin v. American Harrow Co. 125 Ga. 699, 28 L. R. A. (N.S.) 785, 54 S. E. 706.
If a mortgagor has waited for an unreasonable time for attacking a sale of mortgaged property and in the meantime third persons have acquired rights in such property, the mortgagor's ignorance of the fact that the assignment of the mortgage with its power of sale under which the property was sold, was not in compliance with law, and that accordingly such sale was not in compliance with law does not prevent the application of the doctrines of estoppel and laches.34
The justice of the result which is reached by holding that a mistake of law has no legal significance depends to a large extent upon the nature of the relief which is sought. If A has paid money to B which A does not owe, and he had paid it because of a mistake of law and without any intention of taking chances as to the existence of the rule of law, it seems unjust to permit B to retain such money and to enrich himself at A's expense. If the question arises in equity where a flexible decree can be rendered which to some extent, at least, preserves the rights of the parties, the most just results seem to follow where, upon one theory or another, the courts give relief against mistakes of law. If A and B have entered into a contract which apart from B's mistake of law possesses all the elements of a valid contract, the consequences of enabling B to resist performance because of a mistake of law on his part which is not shared by A, are sometimes disastrous. Probably, however, the consequences are no worse where the mistake is one of law than they are where the mistake is one of fact which B has made and about which A is not informed. Whatever the consequences of treating mistake of law as a defense to an executory contract, it would seem clear that relief ought to be given where B's mistake is due to A's innocent misrepresentation, and still more clearly where B's mistake is due to A's fraudulent misrepresentation. Prom the avidity with which the courts seek to find some means of justifying themselves in giving relief in the particular case, while at the same time they profess to hold that no relief should be given for a mistake of pure law. it is evident that the principle is one which works very badly in its actual application.
33 Clark v. Carter, 234 Mo. 90, 136 8. W. 310. 34 Kenny v. McKenzie, 25 S. D. 485,
49 L R. A. (N.S.) 775, 127 N. W. 597. (Statute authorized relief in case of mistake of law.)
Sec. 401. Mistake of law involving mistake of fact An exception to this general rule is made by some eminent authorities as follows: If the mistake is a mistake as to a general rule of law, the rule already given applies, and no relief can be given; but if it is a mistake as to the private right of a party to the contract, the contract may be avoided therefor.1 In applying this principle a mistake as to one's title to realty,2 or as to the validity of a lien on one's realty,3 or a mistake as to the legal effect of a note, such as whether it carried interest;4 or ignorance of a right to avoid a contract,5 as where the written memorandum of a contract, which is in the possession of the adversary party, is so incomplete that it does not comply with the statute of frauds,6 are such mistakes as to private rights as justify the party who has made such mistake in avoiding the transaction. A mistake in believing that A had adopted B and C, and that B and C were accordingly the heirs of A, is said to be a mistake of fact whether the mistake exists in believing that the party had executed the instrument whereby such others were adopted, or whether the mistake was one as to the legal effect of such instrument.7 Equity will relieve trustees from a contract which they have entered into under a mistake as to their powers and duties, if such remedy does not injure the estate or other beneficiaries, and if the result of refusing relief will be to enable certain beneficiaries to enrich themselves at the expense of such trustees.8 Mistake as to the duration of an estate is often regarded as a mistake of fact and is discussed elsewhere.9 One who is advised by counsel that he has only an undivided one-half interest in certain realty, and in reliance on such statement executes a deed for such realty, may avoid it on learning that in fact he is owner thereof in severalty.10 A contract adjusting mutual accounts between A and B, and providing for a conveyance of an undivided interest in property for a certain amount which is based on the assumption that the proceeds of an insurance policy which was made payable to A and the premiums for which were paid out of the income of property which belonged to A and B jointly, would belong to B if A died before B, will not be enforced specifically.11