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Category: Consumer Protection Law
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Experience:  Consumer Lawyer
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My husband and I purchased a car last night. We live in California.

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My husband and I purchased a car last night. We live in California. The dealer made a mistake on the sales contract and gave us more money for our trade in. They just discovered their mistake. Now they said they have the right to rescind the contract and write a new contract. Do they have that right?

LADY LAWYER : Hello, Thanks for your question! I look forward to helping you today. Please give me a moment to review your question and to answer you.
LADY LAWYER : How much more did they give you than you were supposed to get? Did you notice the mistake?
Customer: $7000.00 and no we did not notice. They said they had to do some number fanagaling. So we didn't think anything of it
LADY LAWYER : Thank you. What you have here is a unilateral mistake, and yes, they do have a right to rescind the contract, BUT, if you do not want to sign a new one, you do not have to. You would have to return the car and they would have to return your money and /or trade in. It is possible that this was not a mistake by the dealer. They are known for things like this and then they get the customer to sign another contract at a higher rate. The problem is, there is no way to prove that this wasn't an honest mistake. The key thing to remember is that you have NO legal obligation to sign a new contract if the terms don't suit you and you do have the option to completely cancel the deal.
Customer: We also know that they have already submitted everything to the bank. The bank called us today
LADY LAWYER : Right, but you still have the right not to sign under any new terms they propose.
Customer: So can we force them to leave the contract as it is?
LADY LAWYER : No. But you do not have to sign a new one.
LADY LAWYER : they will claim unilateral mistake. This means there is an obvious mistake in the contract on the part of one party. The contract may be rescinded if such a thing happens.
LADY LAWYER : But a totally new contract must be entered into and if you don't like the terms, you don't need to sign it.
LADY LAWYER : I am sure your interest rate is going to go up, as this is what usually happens when the dealers do something like this.
Customer: We want to just leave the contract as it is and keep the car. Our contract states they can only cancel if they cannot get financing
LADY LAWYER : I understand that would be ideal for you. But that is not the law. The law will let them cancel the contract due to the unilateral mistake they made by giving you 7k over the value you discussed.
LADY LAWYER : If you do nothing, they can sue you and they would win. But that is something you do have an option to do.
Customer: Thanks
LADY LAWYER : In the case of Donovan v. RRL Corp., 27 P.3d 702 (Cal. 2001), the Supreme Court of California accepted the Restatement (Second) of Contracts' rule that a unilateral mistake of fact is a basis for rescission of a contract.
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