Case Problem Analysis: Bilateral Mistake

When Santino Simms and Luna Batista divorced, they agreed to split their assets equally without specifically mentioning any stock accounts. They owned an account with Bernie L. Milford Investment Securities estimated to be worth $5.4 million. Simms kept the account and paid Batista more than $6.5 million, including $2.7 million to offset the amount that they believed was in the account. Two years after the divorce agreement was signed, Simms learned that the account actually never existed due to its manager's fraud.

Identifying the Facts and Issues

This contract

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all of the four required elements of a contract: agreement, capacity, consideration, and legality. When the parties learned that the Milford account was worthless,

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would want to get out of this contract because

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kept the worthless account and paid

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cash for one-half of the supposed value.

Assessment question

If a court does not enforce the contract between Santino and Luna, it is because of a lack of

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. If the parties had a voluntary consent problem, it was

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.

Assessment question

The divorce settlement agreement

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explicitly mention the Milford account and

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explicitly mention the equal split of stock shares in the Milford account. Therefore, the finding that the Milford account was nonexistent two years after the divorce agreement

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amount to a material mistake of fact.

Assessment question

A court

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likely rescind this agreement due to a bilateral mistake. Luna

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have to return the money she received under the agreement.

Assessment question

What If the Facts Were Different?

Assume that, after the divorce agreement was reached, Santino Simms found that his Milford account had substantially increased in value.

In this case, Luna

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rescind the agreement to obtain the increased value. Given these revised facts, there

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be a mutual mistake between Santino Simms and Luna Batista.