Story Case

McCormik, a dealer in sailing boats, had two sloops named "Queen." One was an old one and the other was a new one of the latest model. He sold the old one to H. C. Coar.

Several days later, F. I. Merill advertised in the paper for a good sloop. Coar answered the advertisement saying that he would sell the sloop "Queen", which he had recently purchased from McCormik. He offered her for sale at a slightly advanced price.

Merill knew of the new sloop "Queen" owned by McCormik but he did not know of the old one. Consequently, he accepted the offer immediately. When he found out that it was not the one he had in mind he refused to take the old boat; Coar started suit for breach of contract. Merill defended on the ground of mistake.

Is the defense good?

Exiling Court Case. Kyle Vs. Kavanagh, Volume 103 Massachusetts Reports, Page 356; Volume 4 American Reports, Page 560

At the trial of this case, it appeared that Kyle executed and gave to Kavanagh the following written agreement:

"I hereby agree to sell E. Kavanagh, four lots of land in Waltham, on Prospect Street, so called, for 50 shares of Mitchell granite stock, 9,000 shares of Revenue Gold stock, also $150 in lawful money for said land".

Kavanagh looked at the lots which he supposed were included in this offer, and accepted the same. Thereafter, Kyle tendered the deed to four lots on Prospect Street, in the city of "Waltham. It was then discovered that there were two Prospect Streets in Waltham. Kyle was thinking of one street where he owned the lots and Kavanagh had in mind lots on the other street, on which Kyle owned no lots. Under the circumstances, Kavanagh refused to accept the deeds or transfer the stock and pay the money as agreed. Thereupon, Kyle brought this action for damages.

Kavanagh contended that no contract was ever made between them, because one was thinking of one thing, and the other of another. Their minds never really met on the same subject matter.

Decision

No contract results from an agreement where the parties are laboring under a mutual mistake as to the identity of the subject matter, concerning which they attempt to contract. In this case, if the contention of Kavanagh is true, he was thinking of lots in one place, and Kyle was offering to sell him lots in another place. Both thought that each had in mind the same lots. Since they did not, then their minds never met, and no contract was made.

Mr. Justice Morton said:"The instructions given were correct in substance, that: If the defendant was negotiating for one thing and the plaintiff was selling another thing, and their minds did not agree as to the subject matter of the sale, there would be no contract by which the defendant would be bound, though there was no fraud on the part of the plaintiff. This ruling is in accordance with the elementary principles of the law of contracts".

Judgment was given for Kavanagh.

Ruling Law. Story Case Answer

When one of the contracting parties thinks that he is contracting in reference to one thing, and the other is contracting in reference to another thing, obviously, the parties have not agreed upon anything whatever. As it is said, their minds have not met upon a common basis. There is lack of real consent to the most important element of the contract, the subject matter. When such a mutual mistake exists between the parties as' to the identity of the thing, concerning which they attempt to contract, no binding contract results. In the Story Case, there was a mutual mistake of the contracting parties as to the subject matter. Because of this mutual mistake, there was no real consent, and equally there was no contract. Consequently, the defense of Merill is good.