Sherwood v. Walker
Citation: Supreme Court of Michigan, 66 Mich. 568 (1887)
Facts
Hiram Walker agreed to sell a cow named Rose of Aberlone to Theodore Sherwood at a price reflecting her value as a beef animal, as both parties believed she was barren and unable to breed. Before delivery, Walker discovered that Rose was in fact pregnant, making her worth significantly more as a breeding cow. Walker refused to deliver the cow, and Sherwood sued for specific performance.
Issue
Whether a mutual mistake as to a basic and material fact — the nature of the subject matter itself — permits rescission of a contract.
Holding
The Michigan Supreme Court held in favor of Walker, allowing rescission. The mistake went to the very nature of the contract’s subject matter: the parties contracted for a barren cow, not a breeding cow. Because the mistake was mutual and went to the essence of what was being sold, the contract could be rescinded.
Rule
A mutual mistake about a fact that goes to the very nature or substance of the subject matter of the contract — as distinguished from a mistake about a quality or attribute — renders the contract voidable and subject to rescission by the adversely affected party.
Significance
The classic mutual mistake case, generating rich discussion about the line between a mistake about the “substance” of a thing (grounds for rescission) and a mistake about its “quality” (not grounds for rescission). The dissent argues that Rose’s barrenness was merely a quality, not substance, highlighting the doctrine’s ambiguity. Foundational for Restatement (Second) § 152.