Law for Business 10th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 5

Carpenter made two separate contracts to buy two parcels of land from the state of Alaska. Both contracts contained the following language: "The Seller makes no warranty, express or implied, nor assumes any liability whatever, regarding the social, economic, or environmental aspects of the Parcel [including] the soil conditions, water drainage, or natural or artificial hazards." The contracts also required the buyer to develop the land as a working farm but did not warrant it was suitable for that use. Carpenter signed a statement saying he had inspected the parcel, or had voluntarily declined to do so, and was satisfied with its description. He borrowed money from the Agricultural Revolving Loan Fund (ARLF), a state agency that loaned money to farmers to help them develop their land. Carpenter's repeated efforts to develop the land and grow crops were unsuccessful due to spring flooding. He eventually abandoned the effort, and the land was reclassified as unsuitable for agriculture. At that point Carter quit making payments on the loans, and ARLF sued him. He claimed he was excused from payment due to a mistake about the suitability of the land for farming. Should Carpenter be excused from repaying the loans under the doctrine of mutual mistake?