Sherwood agreed to buy a cow from Walker for a stated price, both parties believing the animal was barren and therefore valuable only for beef. Before delivery, Walker discovered the cow was actually with calf and capable of breeding, making it far more valuable. Walker refused to deliver, and Sherwood sued for breach of contract. The dispute turned on whether the parties had contracted for the sale of the specific animal regardless of fertility, or whether their agreement rested on a mistaken assumption about the cow’s essential nature.
Is a contract for sale voidable when both parties entered it under a mutual mistake about a basic fact that materially affected the subject matter’s identity and value?
A contract may be avoided for mutual mistake when both parties share a mistaken belief about a fact that goes to the substance or essential nature of the thing bargained for, not merely to its quality or value. A mistake that changes the very character of the subject matter prevents true assent to the same bargain.
Yes. The contract was not enforceable because both parties were mistaken about the cow’s breeding status, and that mistake concerned the substance of the thing sold rather than a mere collateral quality.
The court treated the cow’s supposed barrenness as the foundation of the bargain because that assumption defined the animal as beef cattle rather than breeding stock. If the cow was fertile, the subject matter was materially different in kind and worth from what both parties believed they were exchanging. The court distinguished mistakes that merely affect market value from mistakes that alter the identity or substance of the contracted-for thing. Because the mistake went to the essence of the agreement, Walker was entitled to rescind rather than perform.
Justice Sherwood dissented, arguing the contract was for the identified cow itself and that any mistake concerned only quality or value, which should not defeat an otherwise valid sale.
Sherwood v. Walker is a leading American mutual-mistake case and is frequently taught for the distinction between a mistake as to substance and a mistake as to value. It influenced modern mistake doctrine reflected in Restatement (Second) of Contracts § 152 and is often compared with Wood v. Boynton, 64 Wis. 265 (1885), which refused rescission where the mistake was treated as one of value rather than identity.
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