that the payment clearly exceeded the debt, surely the debtor must have mistaken the amount of either the debt or the payment.
However, Cobb Brothers is, at best, tangentially related--applying, as it does, to a public works bidder's right to rescind its bid prior to the award of the contract, in which context the mistaken bidder has an affirmative duty to inform the public entity of the specific mistake in the bid.
Answering this question is made all the more difficult because "the inquiry is purely subjective, for what caused the decision depends on what went on in the mind of the mistaken person." Id.
(111.) But see, e.g., Jennings, 95 P.3d at 922-23 (holding that, while the prosecution was not required to prove scienter to secure a conviction on the charge of selling alcohol to a minor, the defendant was, nonetheless, entitled to raise as a defense his mistaken belief that the buyer was at least twenty-one years old).
[W]e think the better-reasoned approach is a case-by-case analysis whereby rescission is [only] indicated when the mistaken belief relates to a basic assumption of the parties upon which the contract is made, and which materially affects the agreed performances of the parties.
135 ("[A]ll would agree that even if it is not essential that the mistake be shared, it is essential that the other party was aware of the significance attached by the mistaken person to the subject of the mistake").
2001) (holding that the sales price listed in a newspaper advertisement for a particular automobile was mistaken, due to typographical and proofreading errors made by the newspaper's employees, excusing the seller from liability based on the incorrect price).
Ultimately, the court rejected the companies' claims stating, "If the existence of a fact is not known to the contracting parties, they cannot have a belief concerning that fact; therefore there can be no mistake." (15) In other words, the court reasoned that because the existence of the tailings hazard was not recognized by the parties they could not have formed a mutually mistaken belief concerning it and, therefore, no mistake was extant giving rise to a remedy.
The court observed, "mutual mistake of fact cannot lie against a future event." (20) Thus, the important lesson of this case is that the requirement for an "existing" mistaken fact at formation means that misguided predictions or forecasts about future events, whether explicit or implicit, do not constitute legally recognizable mistakes.
Element 2: The mistaken belief constituted a basic assumption underlying the contract
Element 3: The mistaken belief had a material effect on the bargain
Yet, if one of the parties can show that both of the parties to the contract were mistaken in their belief regarding a fact, that the mistaken belief constituted a basic assumption underlying the contract, the mistake had a material effect on the bargain, and that the contract did not put the risk of the mistake on the party seeking reformation or rescission, then a contractor stands a fair chance of obtaining a remedy.