[Elton's Electronics] Elton's Electronics Sells Electronic Housewares

question 6

Multiple Choice

[Elton's Electronics] Elton's Electronics sells electronic housewares. Elton is looking for a new supplier to produce the standard-sized switchplate for its best-selling blender. He contacts Porter and provides Porter with specifications for where the switches on the switchplate should be placed. Porter provides excellent pricing and delivery terms, which would save Elton a lot of money. Elton and Porter sign a contract for Porter to produce 10,000 standard-sized switchplates according to Elton's specifications. When the completed switchplates arrive, Elton's employees attach them to the blenders, however, the standard-sized switchplates are two millimeters too long. Elton is furious and calls Porter, who says Elton can send back the switchplates and Porter's company can rework them, but there will be a fee because the switchplates he shipped were "standard-size" switchplates, as specified in the contract. Elton disagrees and hangs up the phone. Elton's technician measures both the switchplates and the blender and discovers that the blender face where the switchplate is attached is two millimeters shorter than the well-known "standard-size" switchplate. The technician suggests they could shave off two millimeters from Porter's boards to make them fit on the blenders, however, it would be a lot of work.
-Is Elton likely to be successful in a lawsuit that seeks to void or rescind the contract?

• A) Yes, because it was a mistake of fact.
• B) Yes, because both parties were mistaken about what constitutes a "standard-size" switchplate, and where there was a mutual mistake, either party may choose to rescind the contract.
• C) No, because only Elton, not Porter, was mistaken about what constitutes a "standard-size" switchplate, and a unilateral mistake generally does not void a contract.
• D) Yes, because a unilateral mistake voids a contract.
• E) No, because courts rarely allow rescission in cases of a mutual mistake.

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Definitions:

Economic Event

An occurrence with the potential to affect the financial status or performance of an entity, such as a transaction, market fluctuation, or regulatory change.

Financial Information System

A system that collects and processes financial data to produce reports useful for decision-making purposes.

Fair Market Value

An estimate of the price at which an asset would change hands between a willing buyer and seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Cost

The amount of money or resources expended in order to obtain an item or service.