BUS 3305 – Business Law and Ethics

University of the People

Case Study: Sherwood v. Walker

 The world of law and business is abound with numerous landmark cases that have greatly

influenced the principles and doctrines that govern the conduct of commercial transactions. One

such remarkable case, often in discussions about contract law, is the American case of Sherwood

v. Walker. Decided in the 19th century, this case involves a contract dispute over the sale of a

cow. Despite its seemingly simple premise, it has become a leading case in contract law,

specifically regarding the doctrine of mutual mistake and the concept of a "meeting of the

minds". This discussion delves into the facts of the Sherwood v. Walker case, the key legal issues

involved, the approach taken by the court to address the legal issue, and the application of the

court's approach to the facts of the case. Furthermore, it provides a modern context,

demonstrating how the court's conclusion might be applied in today's business landscape.

Facts of the Case

The case of Sherwood v. Walker, also known as the "Rose the Cow" case, is a seminal case

in American contract law that revolves around the sale of a cow believed to be barren. The

plaintiff, Mr. Sherwood, agreed to purchase a cow named "Rose" from the defendant, Mr.

Walker, a cattle importer, for $80 per pound. The cow was believed by both parties to be barren

and was therefore priced as such. However, after the agreement was made, it was discovered that

Rose was pregnant, significantly increasing her value as a breeder (Briefs Pro, n.d.).

Sherwood filed a suit for replevin, arguing that Walker should be ordered by the court to

give him ownership of the cow as per the agreed rate of $80 per pound. The trial court ruled in

favor of Sherwood, ordering the sale to proceed. However, Walker appealed the decision, leading

to the case being brought before the Supreme Court of Michigan (Quimbee, n.d.).
 The Supreme Court of Michigan ruled in favor of the defendant, Walker. The court found

that the contract was invalid because both parties believed the cow to be barren when in fact, it

was a breeder and fertile. This misunderstanding affected the entire core of the agreement, and

the parties would not have entered into the sale if they had known the true nature of the cow. As

a result, the court found that the contract was not valid (Briefs Pro, n.d.).

This case is significant as it established the principle that a contract may be terminated if

there is a mutual misunderstanding of its terms, due to poor communication or unclear terms. It

also highlights the importance of the nature of the object in a contract and how a change in this

nature could void the contract (Casebriefs, n.d.).

Legal Issues Involved

The main legal issues involved in Sherwood v. Walker revolve around the concept of

mutual mistake and the nature of the contract. The case essentially deals with whether a mutual

mistake about a significant fact (the fertility of the cow) can void a contract. The defendants

argued that there was a mutual mistake about a material fact when the contract was made, which

was that both parties believed the cow to be barren and therefore of less value (Casetext, n.d.).

The defendants, Walker and his associates, believed that the cow was barren and would not

breed, which significantly reduced her value. Sherwood, the plaintiff, also believed the cow to be

barren but thought she could be made to breed. The cow was sold at a price that reflected her

perceived barrenness. However, after the sale, it was discovered that the cow was not barren but

was, in fact, pregnant, which greatly increased her value. The defendants then sought to rescind

the contract, arguing that the mutual mistake about the cow's fertility voided the contract

(Casetext, n.d.).
 The court had to determine whether the mutual mistake about the cow's fertility was a

mistake about a material fact that went to the essence of the contract, and if so, whether this

mistake voided the contract. The court also had to consider whether the cow's fertility was a

quality or an accident, and whether the difference in the cow's actual value versus her perceived

value at the time of the contract was significant enough to void the contract (Casetext, n.d.).

The court ultimately ruled in favor of the defendants, stating that the mutual mistake about

the cow's fertility was a mistake about a material fact that went to the essence of the contract.

The court held that a barren cow is substantially a different creature than a breeding one, and the

mistake affected the character of the animal for all time, and for its present and ultimate use.

Therefore, the defendants had a right to rescind the contract (Casetext, n.d.).

Court's Approach

The court in Sherwood v. Walker took an approach that focused on the concept of mutual

mistake as a basis for rescinding a contract. The court held that a party who has given an

apparent consent to a contract of sale may refuse to execute it, or he may avoid it after it has

been completed, if the assent was founded, or the contract made, upon the mistake of a material

fact (Harris, n.d.). In this case, the material fact was the fertility of the cow. Both parties believed

the cow to be barren at the time of the sale, and the cow was sold at a price reflecting her value

as a barren cow. When it was discovered that the cow was not barren, the defendants had the

right to rescind the contract.

The court's reasoning was that the cow, if barren, was a substantially different creature

than a breeding one. The court stated, "A barren cow is substantially a different creature than a

breeding one. There is as much difference between them for all purposes of use as there is
between an ox and a cow that is capable of breeding and giving milk" (Harris, n.d.). Therefore,

the court concluded that the mistake affected the character of the animal for all time, and for her

present and ultimate use. She was not in fact the animal, or the kind of animal, the defendants

intended to sell or the plaintiff to buy.

Application of Approach to Facts

The court in Sherwood v. Walker applied its approach to the facts of the case by examining

the nature of the mutual mistake and its impact on the substance of the contract. The court

differentiated between a mistake that affects the substance of the contract and one that pertains to

a mere quality or accident. The court held that a mistake that goes to the whole substance of the

agreement, such as the subject matter of the sale, the price, or some collateral fact materially

inducing the agreement, can be grounds for rescinding the contract if the mistake is mutual

(Casetext, n.d.).

In applying this principle to the facts of the case, the court found that the mutual mistake of

the parties went to the whole substance of the agreement. The cow, Rose 2d of Aberlone, was

believed by both parties to be barren and was sold at a price reflecting her value as a beef

creature. However, the cow was not barren and was, in fact, a breeding cow, which significantly

increased her value. The court held that a barren cow is substantially a different creature than a

breeding one, and the mistake affected the character of the animal for all time, and for its present

and ultimate use. The court concluded that the cow was not in fact the animal, or the kind of

animal, the defendants intended to sell or the plaintiff intended to buy. Therefore, the court held

that the defendants had a right to rescind the contract and refuse to deliver the cow (Casetext,

n.d.).
 Application in a Modern Business Setting

In a modern business setting, let's consider a hypothetical scenario involving a software

development company, AlphaTech, and a client, BetaCorp. AlphaTech agrees to develop a

custom software solution for BetaCorp for $500,000. Both parties believe that the software will

take six months to develop. However, after signing the contract, it is discovered that due to the

complexity of the project, it will actually take two years to complete. This significantly increases

the cost and time commitment for AlphaTech, and the software's value for BetaCorp, as they

need the software solution sooner.

Applying the principle from Sherwood v. Walker, AlphaTech could potentially rescind the

contract due to a mutual mistake about a material fact - the time and cost required for the

software development. This mistake significantly affects the value of the contract for both

parties. AlphaTech would be burdened with a much larger time and cost commitment than

anticipated, and BetaCorp would not receive the software in the timeframe they need, reducing

its value to them. However, it's important to note that the application of this principle would

depend on the specific laws and regulations in the jurisdiction where the contract was made, as

well as the specific terms and conditions of the contract.

Conclusion

In conclusion, the Sherwood v. Walker case represents a significant development in the

understanding of mutual mistake and "meeting of the minds" in contract law. It established the

precedence that a contract could be voided due to a mutual mistake about a material fact. This

legal principle has critical implications in modern business, emphasizing the significance of due

diligence and complete understanding of all aspects of a deal prior to the finalization of a
contract. As demonstrated through the example of a company sale hinged on the validity of a

patent, it becomes evident that any substantial error or misconception could result in the

voidance of the contract. Thus, Sherwood v. Walker continues to resonate in the realm of contract

law and business transactions, underlining the importance of clear, accurate, and shared

understanding between contractual parties.

References

Briefs Pro. (n.d.). Sherwood v. Walker. Retrieved from https://briefspro.com/casebrief/sherwood-

v-walker/

Casebriefs. (n.d.). Sherwood v. Walker. Retrieved from

https://www.casebriefs.com/blog/law/contracts/contracts-keyed-to-dawson/policing-the-bargain-

contracts-keyed-to-dawson-contracts-law/sherwood-v-walker/amp/

Casetext. (n.d.). Sherwood v. Walker, 66 Mich. 568. Retrieved from

https://casetext.com/case/sherwood-v-walker

Harris, E. (n.d.). Sherwood v. Walker. U.S. Contract Law for LL.M. Students. Retrieved from

https://blogs.kentlaw.iit.edu/harriscontracts/home/excuse/sherwood-v-walker/
Quimbee. (n.d.). Sherwood v. Walker. Retrieved from

https://www.quimbee.com/cases/sherwood-v-walker