Contracts are certainly not inviolate, as there are numerous legal doctrines to set them aside, reform them, even add terms to them. The general idea is to effectuate the intention of the parties as discerned by a judge or appellate court. There are numerous judicial tools to discern the parties intent, often leading to conflicting results. Ultimately though once a contract is in the court system its interpretation is left to an individual or individuals who probably have no experience and limited understanding of the area of commerce from which the contract arose.
When the contract materially departs from the agreement of the parties or the contract turns out to involve performance beyond the expectations of the parties, the court will sometimes say that there has been a “mutual mistake of fact.” This can lead to the court rescinding the contract, or reforming it to comport with the actual understanding of the parties, and sometimes awarding damages and attorneys fees.
This situation occurs throughout the law, in almost every conceivable context. People want to get out of adoption agreements, supply contracts, debts of all kinds, personal service agreements, you name it. For the sake of predictability it is quite important that you be able to determine whether a contract will be canceled or reformed or enforced. Because of the sweeping nature of the situations into which these doctrines are applied, they are defined with a broad brush and often it is impossible to anticipate what a court will do with them.
Today the Washington State Supreme Court issued a decision involving an agreement sought to be set aside. Its treatment of the notion of “mutual mistake of fact” is of interest, although I’m not sure that it goes very far in making things any more predictable.
In State v. John Shannon Codiga, a criminal defendant entered into a plea agreement, pleading guilty to three counts of a crime involving a sentence of seven years. At the sentencing hearing the defendant learned that actually the sentence was life, or could be that. The defendant not surprisingly felt that this ought to invalidate the agreement so that he could go to trial. The prosecutor explained when his office prepared a statement of the defendant’s criminal history it omitted a marijuana-related felony conviction because by its terms it was to be expunged if the defendant stayed out of trouble and it had failed to identify one or more misdemeanors that had occurred to prevent the felony from being extinguished. The prosecutor pointed out that the defendant signed off on this mistaken statement of criminal history but the defendant contended that he too had thought that the felony had been expunged. As it turned out this was a pretty big fact to be mistaken about, as the existence or nonexistence of this conviction .
The Washington Supreme Court has been criticized for deciding what result it wanted then rendering the law in a manner to justify the result. Mutual mistake is a doctrine that applies when there has been a mistake about a material fact but it classically does not apply when the parties have been mistaken about their understanding their rights. This is now a little murky. For example in In Re M.D. it was found that a mistake about the person’s rights before entering into a contract could invalidate the agreement. This decision seemed to gloss over the distinction between law and facts and skip lightly over the idea that the mistake should be mutual.
In todays decision, the State Supreme Court upheld the plea agreement, saying in effect that the defendant had waived the right to claim mutual mistake of fact in the standard printed language of the agreement in which he assumed the risk of a mutual mistake of fact. The court then went on to emphasize that this was a mutual mistake of fact, not of law, as if the doctrine applied only to mistakes of law. This is vertigo inducing language to the average lawyer. The readers’ disorientation is heightened when s/he realizes that an acknowledged mutual mistake of fact is being used by the Court to sustain a contract, not avoid it. This was a unanimous decision!
If we pull ourselves back from behind the looking glass, there is a trend in the law to permit contracting parties to allocate the risk of mistake. Generally speaking this should be bargained for and to be enforceable it should be reasonably clear about what mistakes are being allocated and not a sweeping statement that allocates all mistakes, including those of the party that drafted the agreement with superior bargaining position, to the party presented with the agreement. The court did not analyze the plea bargaining agreement in light of this emerging area of law, it just pointed to the language of the agreement, as if that were the sole determining factor.
It might help in your effort to fit these decisions into a conceptual framework to know that In re M.D. where the doctrine of mutual mistake was contorted to avoid a contract involved a Native American mother trying to reclaim her parental rights which had been contracted away. Today’s decision involved a person arrested for the first time for child molestation. In these two decisions the doctrine was used to affirm parental rights over contractual rights and to incarcerate for life, or most of it anyway, a person who confessed to three acts of child molestation. Another factor that may have come into play is that three State Supreme Court seats are up for re-election this fall.
In these decisions most people would not take issue with the outcome and many would not take issue with the reasoning that obtained the results. Later we will look at decisions that involve other interests. If you go along with this approach in these cases, no fair complaining if a result you don’t like is arrived at through unconventional reasoning.