Beachcomber Coins, Inc. v. Boskett
166 M.J. Super. 442, 400 A.2d 78 (N.J. Super A.D. 1979)
Beachcomber bought a rare coin
from a guy named Boskett for $500, but soon after found that the coin was
Beachcomber sued for rescission.
The term rescission means that he wanted the sale declared void and his
Beachcomber argued that
there had been a mutual mistake.
Bosckett argued that he
didn't realize that the coin was a fake either, so why should he bear the
cost any more than Beachcomber?
The Trial Court found for
The Trial Court found that
it was customary for the buyer to make his own assessment of the
genuineness of the article and to assume the risk if that investigation
Basically, it's buyer
beware. It is the buyer's responsibility to determine if an item is
worth the purchase price.
The Appellate Court reversed.
The Appellate Court found
that a contract can be rescinded if there is a mutual mistake of an "essential fact."
The Court found that just
because Beachcomber didn't realize it was fake when they bought it, that
doesn't preclude rescinding the deal and putting everyone back to the
In general, if both parties
know that there some doubt about something and they still form a contract,
the contract is not void just because things don't turn out the way the
parties want them to. "The risk of the existence of the doubtful fact is
then assumed as one of the elements of the bargain."
However, this case didn't
involve conscious uncertainty.
Both parties thought they knew the value of the coin, they never
considered that there was a chance they could be wrong.
It would be a different
matter if one party knew that the coin might be counterfeit and the other
one did not. In this case, both parties testified that they thought the
coin was genuine.
Compare to the similar case of
Sherwood v. Walker (33 N.W. 919
(1887)), which involved a cow everyone thought was barren. The difference
in that case was that the parties could never be 100% sure the cow
couldn't get pregnant, so there was an element of conscious uncertainty.
Both parties were taking a risk that they could be wrong and
(theoretically) factored that risk into their bargaining.
In this case, both parties
were 100% sure the coin was real, so they did not factor the risk it
could be fake into their bargaining.