Can sophisticated parties avoid contract terms based on unilateral mistake? Burningham v. Westgate Resorts Explained

In Burningham v. Westgate Resorts, the Utah Court of Appeals reinforced that sophisticated parties cannot escape the consequences of clear contract language based on claims they were mistaken about what they were agreeing to.

Background and Facts

Burningham initially agreed to purchase a Park City condominium from Westgate for $899,000, paying an $89,900 deposit. When market conditions deteriorated and Burningham refused to close, the parties disputed whether the deposit should be returned. They eventually settled by executing a new agreement reducing the purchase price to $462,500, with the original $89,900 treated as the “Initial Deposit” that was “Already deposited.”

Crucially, the settlement agreement included paragraph 38.1, which gave Burningham the unilateral right to terminate within seven days and recover his deposit. When Burningham exercised this right, Westgate refused to return the money, claiming the parties never intended the deposit to be refundable.

Key Legal Issues

The court addressed three main arguments: (1) whether mutual mistake precluded enforcement of the deposit refund provision; (2) whether a scrivener’s error in the contract language created ambiguity; and (3) whether the parties achieved a sufficient meeting of the minds on the deposit’s refundability.

Court’s Analysis and Holding

The Court of Appeals affirmed summary judgment for Burningham on all issues. Regarding mutual mistake, the court found that Westgate’s sales agent’s declaration showed only Westgate’s unilateral mistake, not evidence that Burningham shared the same misconception. The declaration contained no substance from actual discussions with Burningham, relying instead on his silence.

On the scrivener’s error claim, the court rejected Westgate’s argument that a reference to “Section 39.1” (which didn’t exist) created ambiguity. Westgate provided no evidence that this typographical error was intended to refer to any other actual provision.

Finally, the court found a sufficient meeting of the minds based on the contract’s unambiguous language identifying the $89,900 as a refundable deposit under multiple circumstances, including Burningham’s timely termination.

Practice Implications

This decision emphasizes that sophisticated parties represented by counsel are charged with knowledge of their contract terms and cannot later claim they didn’t understand what they signed. When drafting agreements involving conditional deposits or termination rights, practitioners must ensure the language precisely reflects the parties’ actual intent, as courts will enforce unambiguous terms regardless of later protestations about subjective understanding.