Saunders v. New Orleans Pub. Serv., Inc. - 387 So. 2d 603 (La. Ct. App. 1980)

Rule:

Compromises are favored in law, and the burden of proving the invalidity of a compromise is on the party attacking the contract. The mere fact that a bad bargain was made is not in itself a sufficient ground for invalidating the compromise. However, since an essential element of every contract is consent by the parties with regard to a matter mutually understood, reciprocally communicated, and resulting from a free and deliberate exercise of the will, a contract may be invalidated if the consent was produced by error. La. Civ. Code Ann. art. 1819. Nonetheless, the only error that invalidates a contract is an error in some point which was a principal cause for making the contract. La. Civ. Code Ann. art. 1823.

Facts:

Saunders was on a city bus that was involved in an accident. Saunders went to a city bus doctor who did not make a physical exam and determined that her pain would be resolved in one week. Thus, Saunders accepted a $ 100 compromise offer based on the city bus doctor's statements. Finding as a fact that the doctor did not truly conduct a physical examination, the trial court concluded the parties would not have settled the case for $ 100.00 if they had known what Saunders’ "true condition" was or that the doctor had not examined plaintiff in reporting his diagnosis and prognosis. The Court therefore overruled the exception on res judicata. At the subsequent trial on the merits it was established that when Saunders’ complaints after the November 10, 1975 accident continued, she consulted two other physicians before finally being examined on February 16, 1976 by an orthopedic surgeon who diagnosed pre-existing bursitis aggravated by trauma and prescribed medication which accomplished relief and eventual recovery. The trial court awarded her $ 2,900 in damages.

Issue:

Did the trial court err in invalidating the compromise contract?

Answer:

No.

Conclusion:

The principal cause for making the contract of compromise was the fact, relied on by both parties on the basis of the medical diagnosis, that plaintiff's injury was simply a minor contusion. The record established that, in addition to the minor contusion, plaintiff sustained a severe aggravation of pre-existing (but previously dormant) bursitis. From this evidence one could reasonably suppose that the parties would not have consented to the compromise for $ 100.00 if the complete and accurate diagnosis had been stated. Thus, the trial court correctly invalidated the contract based on a mutual mistake of fact as to the principal cause for the parties' consent.