Sargent put $5,000 worth of stocks and bonds into an asset management account at Fido Investments.One month later,his account statement indicated that he had a balance in his account of $5 million.Sargent quickly withdrew this amount from his account and put it into a Swiss bank account.Can Fido rescind its payment of $5 million to Sargent on the grounds of mistake?

Question

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If someone must bear a loss as a result of unilateral mistake,the courts are inclined to impose the loss on the mistaken party by not granting rescission unless it appears that the other party should have known of the mistake.In such a case,the courts are likely to grant rescission rather than allow one party to take advantage of the other's mistake.This is so even if the nonmistaken party must bear a loss as a result of rescission,since he or she could have avoided the loss by acting in good faith or by exercising reasonable care.

Sargent Put $5,000 Worth of Stocks and Bonds into an Asset