Quote from: JoelKatz on November 09, 2012, 07:41:06 PM

Quote from: kakobrekla on November 09, 2012, 07:24:35 PM

Quote from: JoelKatz on November 09, 2012, 07:14:04 PM

Two people both believe that there are 1,500 pounds of cherries in a truck. They agree to exchange the 1,500 pounds of cherries in the truck for $5,000. It turns out, through equal fault, that they were mistaken and there are only 1,200 pounds of cherries in the truck.

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Aug 10 08:10:17 in the event BS&T goes bust, I have more than enough assets to cover that

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In the event there is less than 1500 pounds of cherries on the truck, I have more than enough cherries to cover that, but if I don't - I will take your money?

No. If it turns out there aren't 1,500 pounds of cherries on the truck, then some equitable way has to be found to split the damages among the parties. If the money hasn't already changed hands and the cherries are still intact, it might make sense to just void the contract. But if some of the cherries have already been consumed or the parties have taken irreversible actions relying on the contract, then the harm done by the common mistake has to be divided fairly between the parties.

That's what I'm suggesting should happen here. Both parties made the same mistake which directly led to the harm and had the mistake not been made by both parties the contract wouldn't have existed, so the harm should be divided fairly between the parties. I'm not proposing any specific division as fair, but 50/50 would be my default presumption. (Actually, if Patrick expected to get a greater share of the profits than those he borrowed from, it might be just to make him bear a greater share of the losses.)

You're repeating the same fallacy again and again. The two cases aren't remotely similar.

In the cherries case either:

1. Both parties can (or have) verify the contents of the truck (e.g. they're standing by it) - both equally at fault,
2. Neither party can (or have) verify the contents of the truck (truck in neither of their possession) - contract void.

In this case PH, as you specifically pointed out, PH's assertion was:

"in the event BS&T goes bust, I have more than enough assets to cover that"

Only PH can verify what his assets are - MP can't.

Going back to the cherry case, that makes the actual analogy:

PH: I have a truck with 1500 pounds of cherries on to sell you.
MP: Are there really 1500 pounds of cherries on it?
PH: Yes.
MP: OK I'll buy the truck.

Some months Later.

PH: About that truck ... The truck's bust and turns out it had 5 pounds of bananas in it not any cherries. So you can't have the money you paid me back as you should have known I couldn't possibly have any cherries.

At no stage was MP shown the truck - but made the deal assuming PH acted in good faith and knew what in his truck. The above is YOUR argument, not one PH himself has made btw.

Now you're arguing that everyone knew PH only grew bananas so anyone who tried to buy cherries off him is as much at fault as he was for trying to sell them and for not looking inside his own truck that noone else had access to.

The saddest thing about your little argument is that PH himself seems to accept that he owes the funds - and hence that the error was his. Not once does he appear to argue that his own incompetence (by YOUR definition - as he apparently couldnt reach a conclusion that you believe everyone else with less information could reach) negates the debt he owes or alters the fact that he's in default.

And no - both parties did NOT make the same mistake. PH's mistake was not properly evaluating his OWN investments to ensure they were pirate-free - compounded by asserting that to obtain new business. MP's mistake was believing PH's assertion. If someone portrays themselves as competent in an area (in this case, assessing the viability of loans) then subsequent evidence that they weren't as competent as they liked to think doesn't remove from them their contractual obligations just because "well, everyone should have known he was wrong."

You can't have a common mistake where only one party is in a position to ascertain the relevant facts and the second party relies on an assertion from the first party. Your example very carefully avoids the issue of who has possession of the truck/cherries and whether either/both parties have looked into it. Written more clearly your example would clarify that PH owned the truck and asserted that he had verified its contents. Moreover his "in the event BS&T goes bust, I have more than enough assets to cover that" is analogous to a claim of "even if the truck is empty I have enough cherries to give you yours anyway."

It's a terrible analogy backing up an even worse argument.