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Land contracts may be rescinded for mutual mistake.
Plaintiff and defendant entered into a written contract for the purchase of land. A few days earlier, the local planning board had published a notice of a proposed amendment to a zoning-by-law. The amendment would have required plaintiff to obtain a special permit to use the premises as contemplated. The agreement provided that defendant would provide a deed free of encumbrances except for provisions of existing zoning laws. Plaintiff refused to close and sued. The trial court ordered rescission. Defendant appealed.
Under the circumstances, was the order of rescission proper?
On appeal, the court held that plaintiff bore the risk of the existing zoning laws on the date of closing, not the date that the agreement was entered into. Further, both parties made the contract under the assumption that the zoning laws were not a problem. As a result, this assumption amounted to a mutual mistake, and therefore, the court affirmed the order to rescind the contract.