Master New Jersey Appellate Division permits rescission for mutual mistake where a rare coin sold as genuine turned out to be counterfeit. with this comprehensive case brief.
Beachcomber Coins v. Boskett is a leading modern illustration of mutual mistake in the sale of goods when both parties are honestly, but fundamentally, wrong about the nature of the thing being sold. The case involves the sale of a rare coin believed by both sides to be genuine, which later proved counterfeit. Rather than treating the dispute as one about mere value or quality, the court recognized the mistake as going to the essence of the contract—the very identity and authenticity of the good. For law students, Beachcomber is significant because it operationalizes the Restatement (Second) of Contracts approach to mutual mistake—basic assumption, material effect, and risk allocation—within a UCC sale-of-goods setting. It also shows how courts distinguish between a buyer’s opportunity to inspect and a contractual or conscious assumption of risk, clarifying when “as is” caveat emptor principles will defeat rescission and when they will not.
Beachcomber Coins, Inc. v. Boskett, 166 N.J. Super. 442, 400 A.2d 78 (N.J. Super. Ct. App. Div. 1979)
A coin dealer, Beachcomber Coins, purchased from Boskett a coin represented and understood by both parties to be a rare and valuable key-date coin (commonly discussed as a 1916–D Mercury dime). Prior to the sale, the buyer carefully inspected the coin—using magnification and taking time to examine the mint mark and other indicia of authenticity—and both parties genuinely and in good faith believed the coin to be authentic. The price reflected the value of a genuine key-date coin, not a replica or counterfeit. After the sale, the buyer sought expert confirmation and was informed that the coin was counterfeit and essentially worthless as a collectible. The buyer promptly tendered the coin back and demanded rescission and a refund. The seller refused, arguing that the buyer, an experienced dealer who had ample opportunity to inspect, assumed the risk that the coin might be counterfeit. The trial court denied relief, but the buyer appealed.
Whether a contract for the sale of a coin may be rescinded for mutual mistake when both parties believed the coin to be genuine but it was in fact counterfeit, and whether the buyer’s inspection or expertise placed the risk of mistake on the buyer.
A contract is voidable for mutual mistake where (1) both parties were mistaken at the time of contracting, (2) the mistake relates to a basic assumption on which the contract was made, (3) the mistake has a material effect on the agreed exchange, and (4) the party seeking relief did not bear the risk of the mistake. A party bears the risk if the risk is allocated by agreement (e.g., an “as is” clause), by the court as reasonable in the circumstances, or if the party was consciously ignorant—aware of limited knowledge but proceeding to contract nonetheless. See Restatement (Second) of Contracts §§ 152, 154. In sales of goods, this doctrine operates alongside the UCC; nothing in the UCC precludes rescission for mutual mistake where appropriate.
Yes. The contract was voidable for mutual mistake because the authenticity of the coin was a basic assumption of the bargain, the mistake materially affected the exchange, and the buyer did not bear the risk of the mistake. Rescission and restitution were appropriate upon the buyer’s tender of the coin.
The court emphasized that both parties believed they were contracting for a genuine rare coin; authenticity was a basic assumption underlying the transaction. The difference between a genuine key-date coin and a counterfeit is not a mere difference in quality or value, but a difference in the identity of the thing being sold. The mistake therefore materially affected the agreed exchange: a coin worth substantially more if genuine becomes essentially worthless to a collector if counterfeit. Turning to risk allocation, the court found no express agreement placing the risk on the buyer—there was no “as is” provision or disclaimer—and nothing else suggested the buyer had assumed the risk. The buyer’s inspection, even if careful and expert, did not itself transfer the risk. Under Restatement § 154, a party bears the risk if he is consciously ignorant—that is, aware that his knowledge is limited but choosing to proceed—or if the risk is allocated by agreement or by the court as reasonable. Here, both parties genuinely believed the coin to be authentic; the buyer did not proceed in the face of a known uncertainty, and there was no allocation of risk in the contract. The court rejected the notion that a professional buyer’s expertise or opportunity to inspect automatically shifts the risk, noting that even experts can be deceived by high-quality counterfeits. Because all elements of mutual mistake were satisfied and no risk-shifting principle applied, rescission with restitution of the purchase price was warranted.
Beachcomber is routinely taught to demonstrate how mutual mistake functions in modern commercial settings. It distinguishes mistakes about the essence or identity of the subject matter (authenticity) from mere differences in value or quality, and it underscores that opportunity to inspect or professional status does not, without more, saddle a buyer with the risk of mistake. The case also provides a clear, Restatement-driven framework for analyzing risk allocation—highlighting the role of explicit contract terms (e.g., “as is”), conscious ignorance, and equitable considerations—making it a foundational case for mastering mistake doctrine in Contracts.
The court treats authenticity as going to the identity or essence of the good, not merely its quality or market price. A genuine rare coin and a counterfeit are fundamentally different items; the latter defeats the basic assumption underlying the contract. By contrast, a mistake about value (e.g., market fluctuations or minor grading differences) typically does not warrant rescission.
Not by itself. The court held that mere opportunity to inspect or even expert examination does not shift the risk unless the contract allocates it (e.g., an “as is” clause) or the buyer proceeds with conscious awareness of limited knowledge. Expert buyers can still obtain rescission where both parties were honestly mistaken about a basic assumption.
Likely yes. An “as is” clause typically allocates the risk of mistake to the buyer, signaling that the buyer accepts the goods with all faults, including potential counterfeit status. Under Restatement § 154, that contractual allocation would usually preclude rescission for mutual mistake.
The UCC governs sales of goods, but it does not displace equitable rescission for mutual mistake. Beachcomber applies Restatement principles alongside the UCC framework. Separate UCC warranty theories (e.g., express warranty by description) may also be implicated, but the court’s remedy was rescission based on mutual mistake, which the UCC does not foreclose.
Conscious ignorance under Restatement § 154(b) exists when a party knows its knowledge is limited but proceeds anyway, thereby assuming the risk of mistake. The court found no conscious ignorance because both parties confidently believed the coin was genuine and did not knowingly accept uncertainty about authenticity.
Rescission with restitution: the buyer tenders the coin back and the seller returns the purchase price. This restores the parties to their pre-contract positions, which is appropriate when a contract is voidable for mutual mistake going to a basic assumption of the bargain.
Beachcomber Coins v. Boskett exemplifies the modern, Restatement-based approach to mutual mistake in commercial transactions. When both parties are fundamentally wrong about a basic assumption—here, the authenticity of a rare coin—and that mistake materially affects the exchange, rescission is available unless the parties have allocated the risk or the buyer proceeded in conscious ignorance. For practitioners and students alike, the case underscores the importance of explicit risk allocation in sales (e.g., “as is” clauses), warns against over-reliance on inspection to shift risk, and provides a clean analytic template for evaluating mutual mistake: identify the basic assumption, assess materiality, and determine whether risk was allocated expressly, implicitly, or by conscious choice.