Question

When Steven Simkin divorced Laura Blank, they agreed to split their assets equally. They owned an account with Bernard L. Madoff Investment Securities estimated to be worth $5.4 million. Simkin kept the account and paid Blank more than $6.5 million—including $2.7 million to offset the amount of the funds that they believed were in the account. Later, they learned that the account actually contained no funds due to its manager's fraud. Did Steven and Laura have a contract? What was the subject of the contract? It was a agreement. Did they agree to split their assets equally under the terms of the contract? Of the elements of a valid contract- mutual assent, consideration, capacity, legality-which element of the divorce agreement is in issue here? Why? What term of the divorce agreement indicates the parties may not have had a meeting of the minds (mutual assent)? When the parties learned the Madoff account was worthless, who might want to get out of this agreement? Why? Because kept the Madoff account and paid $2.7 million for a one-half share. How can assent be invalidated? 1. 2. 3. 4. Which one occurred here? Were both parties mistaken as to the amount in the Madoff account? What type of mistake was this? What type of mutual mistake was this? Why was this a mistake of fact? Is Steven more likely to get out of the agreement because it was a mistake of fact? In a mistake of value parties the risk of the value changing so that if the value changes, the parties can't say it was mistake. What was different about this mistake? The parties mistaken as to the actual value of the account, but it was not because they assumed the risk of the account decreasing over time. The mistake was that the account had no value because it had been . How does the remedy differ if it was a mistake of value? If it is a mistake of value you generally get out of the contract - if it is a mistake of fact you get out of the contract. Would a court likely rescind this agreement due to mutual mistake of fact? Would Laura have to return the monies she received in the divorce? What if the account was properly managed and the stock market had dropped from the time the agreement was made until Steven had to pay Laura? Could Steven then rescind the agreement? Why? This is a decrease in value and a mistake as to the won't be rescinded.

Answer 1

yes the agreement can be rescinded on the basis of bilateral mistake as both of them were mistaken about the actual fact and acted upon it believing they had funds in their accounts which they found out later.

yes they agreed to equally split their assets as per terms of contract

consideration was missing here.

it was a mutual bilateral mistake as both the parties where under a wrong understanding

A mutual mistake occurs when the parties to a contract are both mistaken about the same material fact within their contract. when there is a meeting of the minds, but the parties are mistaken. Hence the contract is voidable.yes it is mistake of a fact.

yes steven is more likely to get out of the contract.

in case of mistake of value in a contract each party can enforce the contract

yes court can rescind their contract due to bilateral mistake of fact and laura has to return the sums she received back