PJC Business

C ONTRACTS

PJC 101.25

PJC 101.25 Defenses—Instruction on Mutual Mistake of Fact Failure to comply is excused if the agreement was made as the result of a mutual mistake. A mutual mistake results from a mistake of fact common to both parties if both parties had the same misconception concerning the fact in question. A mistake by one party but not the other is not a mutual mistake. COMMENT When to use. PJC 101.25 is appropriate when a party disputes terms of the agree ment on the basis that they were established by mutual mistake of fact. See PJC 101.26 for an instruction on mutual mistake due to a scrivener’s error. Mistake must relate to same subject matter. To prove a mutual mistake, evi dence must show that both parties had the same misunderstanding of the same material fact. A.L.G. Enterprises v. Huffman , 660 S.W.2d 603, 606 (Tex. App.—Corpus Christi–Edinburg 1983), aff’d & remanded for mutual mistake issue only , 672 S.W.2d 230 (Tex. 1984). Excuses failure to perform. Mutual mistake is an equitable defense that, if proved, excuses a party’s failure to perform a contract. A.L.G. Enterprises , 660 S.W.2d at 606; but see Geodyne Energy Income Production Partnership I-E v. Newton Corp. , 161 S.W.3d 482, 491 (Tex. 2005) (holding that “[a] person who intentionally assumes the risk of unknown facts cannot escape a bargain by alleging mistake or misunder standing” (footnote omitted)). The question of mutual mistake is for the jury. See, e.g., Davis v. Grammer , 750 S.W.2d 766, 767 (Tex. 1988) (illustrating that mutual mistake is submitted to the jury); see also James T. Taylor & Son, Inc. v. Arlington Independent School District , 335 S.W.2d 371, 376 (Tex. 1960). This instruction may also be used, in slightly different language, to submit an affirmative claim for rescission. Caveat: unilateral mistake. Case law has drawn a distinction between unilateral and mutual mistake. Evidence may give rise to a defense based on unilateral mistake but fail to raise a defense based on mutual mistake. See Durham v. Uvalde Rock Asphalt Co. , 599 S.W.2d 866, 870 (Tex. App.—San Antonio 1980, no writ). For a dis cussion of issues involved in cases of unilateral mistake, see Monarch Marking System Co. v. Reed’s Photo Mart, Inc. , 485 S.W.2d 905 (Tex. 1972).

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