If you believe the contract implicitly allocates that risk to Patrick, then equitable mistake wouldn't apply.
Patrick
explicitly allocated the risk to himself. Thus, equitable mistake doesn't apply.
I read this as allocating the risk that individual loans will default, not the risk that of correlated default. He can't have explicitly allocated a risk he didn't know existed.
I know there are some risks involved and potential to lose serious money on some of the loans I have out in the wild.
This is talking again about the risk of individual loans defaulting, not coordinated default due to common risk.
I... carry the risk from bad loans and the timing of requests.
Again, in context, this referred to the risk that individual loans would default.
As coinft points out, if the loans had done better than expected the excess profits wouldn't have been equitably split, they would have gone to Patrick.
That's true, but I don't see why that matters. The issue is whether and how they agreed to allocate the risk of coordinated default. I agree the contract allocates any "excess" profit to Patrick. But that says nothing about whether or how it allocates the risk of coordinated default.
It was a common mistaken belief that the loans were not correlated and that there did not exist a common event that would or could cause a significant fraction of loans to default at the same time. The question is whether the contract allocated this specific risk.