Jordan v Knafel: a troubling take on mutual mistake: the first district found in favor of Michael Jordan against his former mistress in an opinion that, while interesting, includes a troubling analysis of the mutual-mistake-of-fact doctrine. This article considers the ramifications of the ruling and suggests practice pointers

Illinois Bar Journal, June, 2009 by Joseph Siprut

In reality, maybe Jordan did demand the test as a precondition to the agreement--but that is not what Knafel's counterclaim alleged. Jordan's summary judgment motion accepted Knafel's allegations as true, and argued that Knafel's claims could not succeed under Illinois law given the actual paternity of the child. If the case had gone to trial, Jordan may have claimed the agreement was conditioned on paternity--or more likely, given the allegations in his declaratory judgment action, Jordan may have denied the existence of any agreement in the first place.

But Jordan's version of events is irrelevant, because his summary judgment motion accepted Knafel's allegations as true. And while a fact-finder may have found it more likely that Jordan would have agreed to a paternity settlement only after first conclusively establishing paternity (and not simply taking his mistress's word for it), Knafel alleged that Jordan agreed to the payment based only on the parties' discussions. Because (on this version of events) Jordan entered into the agreement knowing he had limited information, he got the benefit of his bargain--even though the paternity test later determined Jordan was not the father.

The court overlooked this possibility in its analysis of the mutual mistake of fact defense. Quoting section 152 of the Restatement (Second) of Contracts and the Illinois cases that have adopted it, the court stated that a mistake by both parties "'as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, [and] the contract is voidable by the adversely affected party unless he bears the risk of the mistake."" (19) Because the issue of paternity "went to a basic assumption upon which the contract was made," the court held Jordan was entitled to rescission based on this defense.

The court did not mention Section 154 of the Restatement (Second). That section--entitled "When A Party Bears The Risk Of A Mistake"--states as follows:

   A party bears the risk of a mistake when
   (a) the risk is allocated to him by agreement
   of the parties, or
   (b) he is aware, at the time the contract is
   made, that he has only limited knowledge
   with respect to the facts to which the mistake
   relates but treats his limited knowledge
   as sufficient, or
   (c) the risk is allocated to him by the court
   on the ground that it is reasonable in the
   circumstances to do so.

This section has been adopted by Illinois law. As the Illinois Supreme Court has put the point, "conscious ignorance" is a "conscious present want of knowledge of facts" which a party has concluded will not influence the decision to contract."' If the ignorant party bears the risk of unknown facts, that party cannot assert mutual mistake of fact. (21)

Applied to Jordan, the question is whether he was "consciously ignorant" of his paternity at the time of the agreement. There is no question that Jordan acted only on the information unilaterally supplied by Knafel. Nonetheless, the court held that "Jordan did not bear the risk of mistake as a matter of law as he was not obligated to infer that Knafel had another sexual partner at the time of conception in the face of Knafel's categorical representation," and that Jordan had no duty to attempt "independent verification" of Knafel's representation. (22)