How To Prove A Texas Unilateral Mistake of Fact Defense
In Texas, a defense of Unilateral Mistake of Fact is defined as:
A unilateral mistake of fact occurs when one party is mistaken about a material fact in a contract.
It simply means:
When one party to a contract has the wrong understanding of a material fact.
There are 4 elements of the defense:
- Element 1. There was a mistake as to a material feature of a contract. A unilateral mistake of fact occurs when one party to a contract misunderstands an important detail, like the price or quantity, which significantly affects the agreement, and this misunderstanding is not shared by the other party.
Facts that might support this element look like:
* The contract specified the sale of 100 widgets, but both parties intended the sale to involve only 50 widgets.
* The buyer believed they were purchasing a new vehicle, while the seller mistakenly offered a used vehicle instead.
* The parties agreed on a price of $10,000, but the seller mistakenly quoted a price of $8,000 in the written contract.
* The contract referenced a specific model of equipment, but the seller intended to sell a different model that was not included in the agreement.
* The buyer assumed the contract included delivery services, but the seller did not intend to provide such services as part of the agreement. - Element 2. The mistake was of so great a consequence that it would be unconscionable to enforce the contract as made. The mistake was so serious that it would be unfair to hold the parties to the contract as it stands, because enforcing it would lead to an unreasonable outcome that neither side intended.
Facts that might support this element look like:
* The contract involved the sale of a rare painting, which was mistakenly valued at $1,000 instead of its true worth of $100,000.
* The buyer relied on the seller’s misrepresentation, believing they were purchasing a valuable asset, which significantly impacted their financial situation.
* Enforcing the contract as written would result in the seller suffering an extreme financial loss, undermining the principles of fairness and equity.
* The mistake was not due to negligence, as the seller had no prior experience in art valuation and relied on an unqualified appraiser.
* The parties had a long-standing relationship, and the seller had always provided accurate information in previous transactions, making this mistake particularly egregious. - Element 3. The mistake was made regardless of the exercise of ordinary care. This means that even if someone acted carefully and responsibly, they still made a mistake about a key fact in a contract, which can be a valid reason to challenge or void that contract.
Facts that might support this element look like:
* The defendant relied on a third-party report that contained inaccurate information, despite having no reason to doubt its validity.
* The contract was drafted using a standard template that had not been updated to reflect recent changes in the law.
* The defendant was unaware of a critical fact that was not disclosed by the other party, which would have influenced their decision.
* The mistake arose from a clerical error in the documentation that was not caught during the review process.
* The defendant acted based on a long-standing industry practice that was later revealed to be incorrect. - Element 4. The parties can be placed in status quo in the equity sense. In other words, rescission must not result in prejudice to the other party except for the loss of his bargain. In simple terms, if one party wants to cancel a contract due to a mistake, they can do so only if it doesn’t unfairly harm the other party, aside from losing the deal they thought they had.
Facts that might support this element look like:
* The parties had a mutual understanding of the contract terms, and both acted in good faith throughout the negotiation process.
* The plaintiff has not made any substantial improvements to the property that would create an inequitable situation if rescission were granted.
* The defendant has not incurred any significant expenses or liabilities based on the contract that would be lost if rescission is granted.
* Both parties can revert to their original positions without any financial loss or hardship, as no irreversible actions were taken based on the contract.
* The market conditions have remained stable, allowing both parties to return to their pre-contractual status without prejudice.
(See James T. Taylor & Son, Inc. v. Arlington Indep. Sch. Dist., 335 S. W. 2d 371, 160 Tex. 617 (Tex. Supreme Court 1960).)
If you’re in court without a lawyer and plan to assert a Defense of Unilateral Mistake of Fact, having a Personal Practice of Law at Courtroom5 is essential. You’ll need to make informed decisions about what to file at each phase of your case and prepare legal documents supported by thorough legal research and a strong analysis of the facts. Equip yourself with the tools and knowledge necessary to effectively navigate your legal journey.
Prove Your TX Unilateral Mistake of Fact Defense
U.S. Civil Cases Only