Sherwood v. Walker
66 Mich. 568, 33 N.W. 919 (Mich. 1887)

  • Walker contracted to sell Sherwood a cow. The price suggested that both parties thought the cow was barren. But the cow turned out to be pregnant, which made it worth a whole lot more.
    • If the cow had been barren, it’s only worth its value in meat, which was about 1/10th the price of a breeder.
  • After the contract had been signed, and the calf had been discovered, Walker tried to back out of the contract. Sherwood sued for replevin (recovery of goods unlawfully taken).
    • Sherwood argued that the title for the cow had already been passed, so the contract was complete.
    • Walker argued that the contract was executory and Sherwood had not been given title to the cow, so there was still time to back out of the deal.
  • The lower courts ruled in favor of Sherwood.
  • The Supreme Court reversed the decision.
    • The Appellate Court found that in this contract there was a mutual mistake. Neither party properly assessed the true value of the cow.
    • The Court found that a contract may be rescinded if it was made in reliance upon a mutual mistake of fact.
    • Basically, the parties would not have made the contract if they had known that the cow was a breeder. This mistake affected the substance of the whole consideration and it must be considered that there was no contract to sell the cow as she actually was.
      • The mistake was material to the value of the cow. If, for example, the cow was the wrong color or was missing an ear, that wouldn’t affect the value of the cow, so it wouldn’t make the contract void.
        • This is true even if you really really wanted a brown cow with two ears.
  • In a dissent, it was argued that a general sale does not imply warranty of any quality, or the absence of any. Since there was no warranty made in the contract, if things didn’t turn out the way people expected, that’s just the luck of the draw. The contract should still be enforced.
    • Basically, the dissent was arguing that unless it specified somewhere in the contract that the cow was barren, then if it turned out to be a breeder, it was just tough luck for Walker.
  • This case is distinguished from cases like Beachcomber Coins, Inc. v. Boskett (400 A.2d 78 (N.J. Super A.D. 1979)) and Wood v. Boynton (25 N.W. 42 (1885)) in that in this case, neither party ever thought that there was a possibility the cow was fertile.
    • This case did not involve conscious uncertainty.
    • Most Courts today almost never uphold mutual mistakes. The theory is that there is always a chance that you are wrong about a material fact of the contract. That’s part of the risk of making contracts.