In order to authorize relief for mistake the mistake generally must have been mutual, and it must have been material, and not due to the complainant's negligence; and complainant must show injury. (footnotes omitted) [ Id. at 513. See generally Wilson v. Mid-State Homes, Inc., 53 Tenn. App. 520, 384 S.W.2d 459 (1964).] The character of a mistake allowing for a rescission of contract is discussed at 17 C.J.S. Contracts § 135:
See Bigham v. Madison, 103 Tenn. 358, 52 S.W. 1074 (1899). The case of Wilson v. Mid-State Homes, 53 Tenn. App. 520, 384 S.W.2d 459 (1964), involved a claim for rescission or for damages because of a mistaken boundary line. There the Court said: "In other words, if the defendant knew when the contract was signed that the fence behind the house was on the other man's property and that the stake described in the contract was not the true corner, then this amounted to a misrepresentation and fraud on the complainant.
Some examples of "material and vital" mistakes include mistakes as to the existence of title, location of boundaries, quantities and conditions of land being sold. Harris v. Spencer, Williamson Ch. No. 21628, 1995 WL 413391, at *3 (Tenn. Ct. App. July 14, 1995) (citing Isaacs v.. Bokor, 566 S.W.2d 532, 541 (Tenn. 1978); Wilson v. Mid-State Homes, Inc., 384 S.W.2d 459 (Tenn. Ct. App. 1964); Robinson v. Brooks, 577 S.W.2d 207, 209 (Tenn. Ct. App. 1978)).Hunt v. Twisdale, No. M2006-01870-COA-R3-CV, 2007 WL 2827051, at *7 (Tenn. Ct. App. Sept. 28, 2007).
A court may not rescind a contract for mistake unless the mistake is innocent, mutual, and material to the transaction and unless the complainant shows an injury. Klosterman Dev. Corp., 102 S.W.3d at 632 (quoting Robinson v. Brooks, 577 S.W.2d 207, 209 (Tenn. Ct.App. 1978)); see also Atkins v. Kirkpatrick, 823 S.W.2d 547, 553 (Tenn.Ct.App. 1991); Wilson v. Mid-State Homes, Inc., 53 Tenn.App. 520, 384 S.W.2d 459, 463-64 (1964). In this case, the record clearly establishes that the mistake was innocent and mutual in that both parties anticipated that expanded judicial review would be available. Indeed, neither party challenged at the trial level the provision in the consent order purporting to expand judicial review.
A court may not rescind a contract for mistake unless the mistake is innocent, mutual, and material to the transaction and unless the complainant shows an injury. Klosterman Dev. Corp., 102 S.W.3d at 632 (quoting Robinson v. Brooks, 577 S.W.2d 207, 209 (Tenn. Ct. App. 1978)); see also Atkins v. Kirkpatrick, 823 S.W.2d 547, 553 (Tenn. Ct. App. 1991); Wilson v. Mid-State Homes, Inc., 53 Tenn.App. 520, 384 S.W.2d 459, 463-64 ([Tenn. Ct. App.] 1964). 320 S.W.3d 252, 261 (Tenn. 2010).
However, rescission of a contract may be ordered upon the ground of mutual mistake. Id.; Wilson v. Mid-State Homes, Inc., 384 S.W.2d 459, 464 (Tenn.Ct.App. 1964). A mutual mistake of fact can be a ground for relief if three conditions are met: (1) the mistake relates to an issue material to the transaction, (2) the mistake did not result from the plaintiff's negligence, and (3) the mistake resulted in injury to the plaintiff.
Some examples of "material and vital" mistakes include mistakes as to the existence of title, location of boundaries, quantities and conditions of land being sold. Harris v. Spencer, Williamson Ch. No. 21628, 1995 WL 413391, at *3 (Tenn.Ct.App. W.S. July 14, 1995) (citing Isaacs v. Bokor, 566 S.W.2d 532, 541 (Tenn. 1978); Wilson v. Mid-State Homes, Inc., 384 S.W.2d 459 (Tenn.Ct.App. 1964); Robinson v.Brooks, 577 S.W.2d 207, 209 (Tenn.Ct.App. 1978)). Although courts have stated that the mistake must not be due to the complainant's own negligence, see, e.g., Klosterman, 102 S.W.3d at 632, "reformation is denied only in `extreme cases' where a party's fault `amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.'"
Recission of a contract may be ordered upon the ground of mutual mistake. Atkins v. Kirkpatrick, 823 S.W.2d 547 (Tenn.Ct.App. 1991); Wilson v. Mid-State Homes, Inc., 53 Tenn. App. 520, 384 S.W.2d 459, (Tenn.Ct.App. 1964). To justify recission of a contract, the character of the mistake must be such as to result from unconscious ignorance or forgetfulness of a fact material to the contact or transaction.
At this summary judgment stage of the case, we determine only that the case must be tried on its merits as to mutual mistake of fact and that the contract, as it appears before this Court at this time, is a severable one. The remedies in this situation largely address themselves in the first instance to the discretion of the Chancellor. Wilson v. Mid-State Homes, Inc., 384 S.W.2d 459, 464 (Tenn.Ct.App. 1964). As to the issues of mutual mistake of fact and any evidence that might reflect upon the severability of the contract, the judgment of the Chancellor is reversed and the case remanded for trial on the merits.
The courts of this State have long held that rescission may be ordered on the ground of mutual innocent mistake. See Wilson v. Mid-State Homes, Inc., 53 Tenn. App. 520, 530, 384 S.W.2d 459, 463 (1964); Robinson v. Brooks, 577 S.W.2d 207 (Tenn. App. 1978). The record clearly establishes that both Plaintiffs and Defendants were mistaken as to the suitability of the lot for use as a residential building lot, and Defendants offered no proof to the contrary.