Opinion ID: 1262742
Heading Depth: 2
Heading Rank: 2

Heading: rescission of s.a. # 11

Text: UDOT's next claim is that assuming S.A. # 11 is a valid and binding document, UDOT's chief construction officer, Bert Taylor, signed it under a unilateral mistake of fact and was justified in rescinding the contract. UDOT claims that subsequent to signing S.A. # 11, Taylor realized that in addition to the amount possibly due under S.A. # 11, Young had already been paid $226,200 for the riprap but it was disguised as clearing and grubbing because of Young's unbalanced bid. The record is unclear as to the exact accounting made, and the briefs are not helpful in that regard. However, it would appear that because of Young's increased overhead and other expenses incurred as a result of the underrun, UDOT utilized S.A. # 11 to recalculate the amount due under the riprap item as follows: Amount Under S.A. # 11 81724.8 × 7.354 = $601,004.18 (quantity supplied) (adj. unit price) Amount Already Paid to Young Under Original Contract 81724.8 × 4.00 = $326,899.20 (quantity supplied) (unit price) Because Young had apparently already been paid $326,899.20, that amount was subtracted from $601,004.18 to arrive at the $274,104.98 figure that Young is claiming for the unpaid balance under S.A. # 11. At the very least, UDOT is claiming that $226,200 should be subtracted from the $274,104.98 because $226,200 had already been paid on the riprap item to Young by virtue of its unbalanced item of clearing and grubbing. In John Call Engineering v. Manti City Corp., [6] we delineated the elements of unilateral mistake as follows: 1. The mistake must be of so grave a consequence that to enforce the contract as actually made would be unconscionable. 2. The matter as to which the mistake was made must relate to a material feature of the contract. 3. Generally the mistake must have occurred notwithstanding the exercise of ordinary diligence by the party making the mistake. 4. It must be possible to give relief by way of rescission without serious prejudice to the other party except the loss of his bargain. In other words, it must be possible to put him in status quo. [7] We have also held, When one party's mistake of fact is coupled with knowledge of the mistake by the other party or a mistake is produced by fraud or other inequitable conduct by the nonerring party, the mistake provides a basis for reformation or rescission. [8] Indeed, reformation or rescission may be available where, unknown to one of the parties, an instrument contains a mistake rendering it at variance with the prior understanding and agreement of the parties, and the other party learns of the mistake at the time of the execution of the instrument and later seeks to take advantage of it... . [9] It thus appears that genuine issues of fact exist with regard to whether Bert Taylor signed and approved S.A. # 11 under a mistake of fact, specifically, whether Taylor realized at the time he signed S.A. # 11 that the item of riprap covered in S.A. # 11 was related to the unbalanced item of clearing and grubbing. In other words, did Taylor realize that Young had already been paid $226,200 of the riprap work because that amount had been lumped into the unbalanced clearing and grubbing bid? If UDOT is able to make a showing of unilateral mistake, then rescission of S.A. # 11 is the proper remedy. [10] It is to be observed that UDOT is not attempting to offset the riprap underrun against the clearing and grubbing; rather, UDOT is attempting to rescind S.A. # 11 and counterclaim against Young in order to recover the payment of $226,200 to Young for riprap that was disguised as part of the unbalanced clearing and grubbing. Even had UDOT suspected that part of the riprap item was being subsidized through the clearing and grubbing item, UDOT had no reason to object to the unbalancing until the underrun became apparent and a supplemental agreement was used to further compensate Young.