## Facts

- Sellers owned roughly fifty acres spanning Dover and Medfield, Massachusetts; buildings were in Dover, and the only established access crossed the Medfield portion.
- Buyer, a nonprofit entity, negotiated to purchase the property to operate a tennis and swim club.
- At the time of negotiations, both towns’ zoning by-laws allowed a noncommercial club use as of right, and both parties proceeded on that assumption.
- The parties executed a purchase-and-sale agreement on January 31, 1972, requiring delivery of marketable title “free from encumbrances, except … existing building and zoning laws.”
- Unknown to both parties when they contracted, Medfield had already published notices (January 27 and February 3, 1972) for a hearing on a proposed zoning amendment that would require a special permit for the contemplated club use.
- By statute, adoption of the amendment could operate retroactively to the notice date, threatening the buyer’s assumed right to use the Medfield access and to operate the intended club without discretionary approval.
- After learning of the pending amendment, the buyer refused to close and sought rescission and return of its deposit on a theory of mutual mistake.

## Issues

1. Whether a purchase-and-sale agreement is voidable for mutual mistake when both parties were unaware, at contract formation, that public notice had already issued for a proposed zoning change with potential retroactive effect impairing the contemplated use.
2. Whether a clause making title subject to “existing building and zoning laws” allocates to the buyer the risk of this already-existing, but unknown, zoning notice and its statutory consequences.

## Decision

- The Supreme Judicial Court of Massachusetts affirmed a decree rescinding the agreement and ordering return of the deposit.
- The court held that the contract language placed on the buyer the risk of zoning restrictions enacted between contract and closing.
- The court also held that the parties’ mutual ignorance of the already-published zoning-hearing notice was a mutual mistake of an existing, material fact not allocated by the agreement.
- Because the mistake concerned a basic assumption of the bargain and materially affected the exchange, equitable rescission was proper.

## Legal Principles

- A standard “subject to existing building and zoning laws” clause generally allocates to the buyer the risk of zoning changes enacted after the contract but before delivery of the deed.
- A contract may be rescinded for mutual mistake when both parties share an erroneous belief about an existing fact that is a basic assumption of the contract and materially affects performance or value.
- A mistake is not excused where the contract allocates the relevant risk; absent such allocation, equity may grant rescission to avoid enforcement of a bargain formed under a shared, material factual error.
- An already-published notice initiating a zoning-amendment process, coupled with statutory retroactivity to the notice date, can constitute an existing fact for mutual mistake analysis.

## Conclusion

The court allowed rescission because both parties contracted on the shared assumption that the intended nonprofit club use and access were secure as of right, while an already-published zoning-hearing notice—capable of triggering retroactive restrictions—was an unknown, material existing fact and not a risk the contract assigned to the buyer.


Dover Pool & Racquet Club, Inc. v. Brooking, 366 Mass. 629, 322 N.E.2d 168 (1975)