Opportunities for mistakes abound in a construction setting where quantities, prices, and dates are so critical. The consequences depend on whether the mistake is unilateral—made only by one party—or mutual—shared by both parties.
If you alone misunderstand the plans and specs and allow for 100 square feet of tile instead of 1,000, this would be a unilateral mistake. It’s your problem without any immediate relief unless you can show that someone intentionally deceived you in some way.
But if both parties to an agreement are mistaken because a document fails to correctly reflect what they each intended, then a court will likely correct the error. For example, let’s say that a lumberyard advertises 4×8 sheets of OSB for sale at $1 each but actually meant to price the sheets at $10 each. You buy 10 sheets, expecting to pay $10, but are charged $100. Who would be right? A case with similar facts held that you, the purchaser, would be right. The store made a mistake in an offer that you accepted, and it’s the store that would be out of luck. The law is clear in most jurisdictions that what one party may have intended is not enough to undo a deal.
However, if it can be shown that the non-mistaken party actually knew that the other party in the deal didn’t accurately understand the terms of the agreement, a court may step in. It may completely cancel the agreement (called “contract rescission”), whereby both parties are no longer bound by the deal and revert back to the position they were in prior to entering into the agreement. Or, if both parties misunderstood the agreement, the court may modify it (known as “contract reformation”) to correctly reflect the parties’ understanding.
But don’t count on either of these remedies to save the day. Courts are reluctant to alter contracts, even when the result of not doing so may be disastrous to the party making the mistake. So remember: Attention to detail is equally important before and after contract execution.
Alexander Barthet is a principle of The Barthet Firm, a 12-lawyer commercial law practice focusing on construction-related matters.
This article is for informational purposes; it is not intended as legal advice. Consult an attorney before taking any action.
