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Copyright (c) 2001 The Harvard Law Review Association
Harvard Law Review

RECENT CASES: Contract Law - Unilateral Mistake - Supreme Court of California Explicitly Accepts Restatement (Second) of Contracts Provisions as State Law.

- Donovan v. RRL Corp., 27 P.3d 702 (Cal. 2001).

December, 2001

115 Harv. L. Rev. 724

Excerpt



To err may be human, but courts were traditionally quite reluctant to let mistaken parties rescind their contractual obligations unilaterally, even in cases of good-faith error. 1 Parting with this tradition, modern courts have taken an increasingly liberal attitude toward granting relief, a development reflected in the Restatement (Second) of Contracts. 2 Recently, in Donovan v. RRL Corp., 3 the Supreme Court of California explicitly accepted the Second Restatement's rule on unilateral mistake of fact as a basis for rescission of a contract. 4 In doing so, however, the court missed the chance to articulate unambiguously a superior bright-line rule for cases involving clerical errors: that good-faith errors should always justify rescission, provided the mistaken party compensates the nonmistaken party for detrimental reliance.

On April 26, 1997, as Brian Donovan was reading the Saturday edition of his local newspaper - the Costa Mesa Daily Pilot - his glance fell on a full-page advertisement placed by Lexus of Westminster. 5 The advertisement showcased, among other automobiles, a sapphire blue 1995 Jaguar XJ6 Vanden Plas, vehicle identification number (VIN) 720603, for sale (ostensibly) for $ 25,995. 6 The next day, Donovan drove to Lexus of Westminster and found the advertised Jaguar. He verified the VIN, test-drove the vehicle, and then offered to buy the car. Upon hearing Donovan's words - "Okay. We will take it at your price, $ 26,000." - the salesperson was silent. 7 Not until Donovan produced the advertisement did the salesperson respond: "That's a ...
 
 
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