The State of Florida enters into a contract with Treasure Salvors governing the salvage of a Spanish galleon that sunk in the 1600s.Under the terms of the contract,the salvagers agree to relinquish 25% of the items recovered to the State of Florida in return for the right to salvage on state lands.At the time the parties enter into the contract,they both believe that the seabed where the ship lies is state land.Subsequently,the United States Supreme Court holds that the continental shelf on which the ship rests has never been owned by Florida.The salvagers sue to rescind the contract.The contract:
A) cannot be rescinded.
B) should be avoided because the parties made a mutual mistake.
C) should be enforced because,although there is a mutual mistake,it is not material.
D) will be enforceable because the United States government will automatically step into the shoes of the State of Florida.

Question

Quizplus · Accepted Answer

The contract should be avoided because both parties made a mutual mistake about the ownership of the seabed where the ship lies, which is a material fact. The fact that the United States government may have a claim to the seabed does not change the fact that the parties were mistaken about the ownership at the time of the contract. This mistake affects the basis of the contract and makes it voidable.

The State of Florida Enters into a Contract with Treasure