Mutual Mistake or Excuse: Which Approach to Pursue When Seeking Judicial Relief From Contractual Obligations on the Basis of Supervening Knowledge?

Abstract

When a person seeks to be relieved from their contractual obligations on the basis of supervening knowledge of a fact existing at the time of contracting that has rendered their performance impracticable or even impossible, and/or has frustrated their purpose in entering into the contract, they would appear to have choice between asserting a mutual mistake enforce-ability defense, or instead asserting one or more of the impossibility, impracticability, or frustration of purpose excuse defenses. Do they in fact have this choice, or does each of these approaches for obtaining relief have its own distinct scope of application, with little if any overlap? If there are circumstances where a person does have this choice, which approach is likely to be more promising as the primary means of seeking relief? There is unfortunately a relative absence of clarifying case law on this question, and this brief article considers the guidance provided by Sections 152 and 266 of the Restatement (Second) of Contracts and the associated Official Comments. The article concludes that where there is a choice available between the two approaches the question as to which one to most aggressively pursue, rather than only plead secondarily in the alternative, turns upon the definition of “materiality” that will be applied by the court with regard to the mutual mistake defense. The mutual mistake defense approach is likely to be the more promising tact in all instances, although perhaps only marginally so if the court applies the most stringent materiality criterion suggested by the Official Comment to Restatement (Second) Section 152.