The Tortuous History of the Mutual-Mistake Defense in Michigan Contract Law

Abstract

ABSTRACT Imagine a world where courts stopped enforcing contracts. There would be a complete breakdown in commerce. Yet courts do not enforce all contracts. Contracts that are the product of fraud or duress, for example, are voidable. The law must strike a balance between protecting legitimate expectations and policing against contract wrongdoing. What if a contract is the product of a mistake? No one was at fault, yet the contract is not what the parties supposed. Should a court enforce it? Sherwood v. Walker (1887) is a landmark case in which the Michigan Supreme Court established the defense of mutual mistake, refusing to enforce a contract that was the product of the parties' erroneous assumption. Sherwood v Walker is still taught in law schools today, and has been cited as authority by courts across the country. But since it was decided, Michigan's high court has twice repudiated the case, only to later embrace it again. This paper explores the convoluted history of the defense of mutual mistake in Michigan contract law.