It can be argued as a defense, and if raised successfully, can lead to the agreement in question being found void ab initio or voidable, or alternatively, an equitable remedy may be provided by the courts.
For instance, contracts entered into under a relevant mistake have not been voidable in English law since Great Peace Shipping Ltd v Tsavliris (International) Ltd (2002).
It was a raw uncut diamond worth hundreds of times the selling price.
[citation needed] One must first distinguish between mechanical calculations and business errors when looking at unilateral mistake.
[citation needed] Ordinarily, unilateral mistake does not make a contract void.
For a mutual mistake to render a contract void, then the item the parties are mistaken about must be material (emphasis added).
Under New Mexico law a bank, title company, document processing firm, or the like is not liable for false information provided to it, any more than a bank was liable for false information from a trusted customer turned embezzler who drew an unauthorized cashier's check:[14] A thing is done "in good faith" within the meaning of this act, when it is in fact done honestly, whether it be done negligently or not.
Roswell was the case of first impression on this issue in the state of New Mexico, and drew on cases in other jurisdictions interpreting the same language, most notably Davis v. Pennsylvania Co. 337 Pa. 456,[16] which on similar facts to Roswell came to the same conclusion and exonerated the innocent actor in favor of shifting any responsibility for the loss to tortfeasors and those who enabled them to act by giving them unjustified authority.
The mere failure to make inquiry, even though there be suspicious circumstances, does not constitute bad faith, unless said failure is due to the deliberate desire to evade knowledge because of a belief or fear that inquiry would disclose a vice or defect in the transaction, – that is to say, where there is an intentional closing of the eyes or stopping of the ears.In Kentucky, it was held in French Bank of California v. First National Bank of Louisville that money received by mistake does not have to be returned if there is an irrevocable change in position.
It held that mistakes do not need to be rectified except by court order or indemnities being issued.
It was not part of its job description to know better, and it did not know better and charged only a nominal fee for the clerical work, clearly not including any investigation.
The attempt to enhance liability or shift blame by filtering data through an innocent party has been tried before, but where the conduit providing document preparation does not know more than its informants and was not hired or paid to investigate, it is not liable in their place for using their bad facts without guilty knowledge.
The U.S. Court of International Trade has gathered the law governing record-keeping mistakes and how they are corrected in Hynix Semiconductor America, Inc. v. United States[19] in which the Court was faced with the application of a tariff that had been calculated at the wrong rate by a customs clerk.
To enforce "anti-dumping" legislation against foreign-made goods, a regulatory scheme was implemented under which such imports were charged a "liquidation duty" at a rate to be found on a schedule.
The schedule had been made up by a panel of experts using standards for adjusting the price differential in overseas goods.
The custom clerk used the wrong category of goods and overcharged the duty, and by the time Hynix figured out what had happened, part of a very short statute of limitations on protest had expired.
Hynix, in reviewing the tariff application to the facts, also provided a guided tour of the different kinds of mistake and how they are treated in the federal court system.
On the other hand, an ignorant mistake occurs where "a party is unaware of the existence of the correct alternative set of facts".
Hynix provided one more criterion, and that is "materiality", citing to extensive development of that requirement in Degussa Canada Ltd. v. United States, 87 F.3d 1301, 1304 (Fed.