Litigation

Contract Rescinded for Unilateral Mistake When Purchase Price was 20% of the Property Value

By H. William Allen et al.

The Arkansas Court of Appeals affirmed rescission of contract based on unilateral mistake in T-1 Construction, Inc. v. Tannenbaum Development Co., LLC, No. 08-889 (March 11, 2009).

Tannenbaum signed a contract to sell five lakefront lots to T-1. The total value of the lots was $325,000 - $400,000. However, the contract stated the total price for all five lots was $70,000; Tannenbaum believed this was the price per lot. Tannenbaum noticed the mistake the day before closing and backed out of the deal. When T-1 sued for breach of contract, the trial court rescinded the contract due to the unilateral mistake.

The court of appeals affirmed, stating that no one would knowingly sell this property for $70,000. As to Tannenbaum's reasonable care in reviewing the contract, the court just held that T-1 failed to prove the trial court's finding was clearly erroneous.

Full post as published by Arkansas Business Litigation Blog on March 12, 2009 (boomark / email).