Unilateral Mistake Claim Fails in the Absence of Allegations of Fraud or Other Wrongdoing

On March 19, 2020, the First Department issued a decision in Quattro Parent LLC v. Rakib, 2020 NY Slip Op. 01966, holding that unilateral mistake claims fail in the absence of evidence of fraud or other wrongdoing, explaining:

The motion court also correctly rejected defendant's unilateral mistake-based defense and counterclaim, because there was no showing of fraud or other wrongdoing and because defendant could not reasonably have relied on the alleged false representations. A court of equity may also rescind a contract for unilateral mistake if the failure to do so would enrich one party at the other's expense, and the parties can be returned to the status quo without prejudice. Here, however, there are no specific allegations of unjust enrichment in the answer and counterclaims. Nor has defendant raised any argument that the status quo can be restored now that plaintiff has ceased doing business.

(Internal citations omitted).

The doctrines of mutual and unilateral mistake are a way to have a court throw a contract out because there was no meeting of the minds by the parties. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.