This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
New York. Smith v. Mackin, 4 Lans. (N. Y.) 41.
Ohio. Butler v. Moses, 43 O. S. 166, 1 N. E. 316. (Where, by a clerical mis-take of a stenographer, an offer of potatoes was made at 35 instead of 55.)
Wisconsin. Harran v. Foley, 62 Wis. 584, 22 N. W. 837. See also, First National Bank v. Hayes, 64 O. S. 100, 59 N. E. 893.
2 Germain Fruit Co. v. Telegraph Co., 137 Cal. 598, 59 L. R. A. 575, 70 Ac. 658; Manly Mfg. Co. v. Telegraph Co, 105 Ga. 235, 31 S. E. 156.
3 Germain Fruit Co. v. Telegraph Co, 137 Cal. 598, 59 L. R. A. 575, 70 Ac. 658.
4 Butler v. Moses, 43 O. S.166,1 N.E. 316.
5 Moffett, Hodgkins & Clarke Co. v. Rochester, 178 U. S. 373, 44 L. ed. 1108; Tyra v. Cheney, 129 Minn. 428, 152 N. W. 835.
6 Moffett, Hodgkins & Clarke Co. v. Rochester, 178 U. S. 373, 44 L. ed. 1108 [reversing 01 Fed. 28, 33 C. C. A. 319; which reversed, 82 Fed. 255].
7 Johnson v. Olsen, 134 Minn. 53, 158 N. W. 805.
8 Hudson Structural Steel Co. v. Smith
& Rumery Co., 110 Me. 123, 43 L. R. A. (N.S.) 654, 85 Atl. 384.
9 Armour v. Renaker, 202 Fed. 901, 121 C. C. A. 259 [affirming Armour v. Renaker, 191 Fed. 481.
10 Mercer v. Hichman-Ebbert Co. (Ky.), 105 S. W. 441.
Even after performance, the party making such mistake is not bound by the contract, but may recover a reasonable compensation.17 If A makes an oral offer and subsequently by mistake he makes a written offer at a lower price, which written offer the adversary party accepts with the knowledge of such mistake, it was assumed that offeror could recover a reasonable compensation.18
The same principle applies if the offeror knows that the offeree misunderstands the terms of the offer, and allows the offeree to accept under such mistake.19 So in written contracts, if by fair construction, the intention of the party thus misled can be given effect, such effect will be given to it.20
11 Harran v. Foley, 62 Wis. 584, 22 N. W. 837.
12 Tyra v. Cheney, 129 Minn. 428, 152 N. W. 835.
13 Tucker v. Denton (Ky.), 15 L. R. A. (N.S.) 289, 106 S. W. 280.
14 Rudisill v. Whitener, 146 N. Car. 403, 15 L. R. A. (N.S.) 81, 59 S. E. 995.
15 Buck v. Equitable Life Assurance Society, 96 Wash. 683,165 Ac. 878.
16 Gauntlett v. Sea Ins. Co., 127 Mich. 504, 86 N. W. 1047.
17 Hudson Structural Steel Co. v. Smith & Rumery Co., 110 Me. 123, 43 L. R. A. (N.S.) 654, 85 Atl. 384; Butler v. Moses, 43 O. S. 166, 1 N. E. 316.
18 Tyra v. Cheney, 129 Minn. 428, 152 N. W. 835. (In this case the reasonable compensation was less than the oral bid; but the buyer did not complain thereof.)
The offeror may hold the offeree to the contract in the sense in which the offeree knew that the offeror understood it, if the offeree has induced the offeror to act in reliance upon the contract.21 This result is sometimes explained on the theory of estoppel.22 But if the contract is in writing and unambiguous, the parol evidence rule23 prevents relief from being given to the party misled, unless circumstances of fraud and the like intervene.
In some jurisdictions, negligence of the mistaken party has a different effect in non-disclosure of this type from that which it has in pure mistake. If A is mistaken as to the contents of a written contract through failure to pay attention to it when read, and B knows of A's mistake, A's negligence does not prevent him from obtaining relief.24 If a check is made out "in full," and the payee does not notice such provision, the maker can not take advantage of his oversight.25 Where differing from pure mistake, non-disclosure of this type has legal effects like fraud.26
If A, who has made an offer under a mistake as to its terms, contends that B has accepted such offer with knowledge of A's mistake, A has the burden of proof and must prove B's knowledge by clear and satisfactory evidence.27 The fact that the bid was very low and another bidder misunderstood the specifications was held to put the adversary party, who was himself an experienced contractor, upon inquiry;28 the fact that the grantee prepares a deed which does not except from the covenant of warranty an outstanding lease, and that the grantor executes such instrument without reading it, does not show that the grantee took an advantage of the mistake of the grantor.29
19Wilson v. Moriarty, 88 Cal. 207, 26 Ac. 85; Manter v. Truesdale, 57 Mo. App. 435.
This point is discussed elsewhere. See ch. LXIII.
20See ch. LXIII [see also, Goulding v. Hammond, 49 Fed. 443].
21Manley v. Saunders, 27 Mich. 347; Blankenship v. Decker, 34 Mont. 292, 85 Ac. 1035; Patterson v. First National Bank, 78 Neb. 228, 110 N. W. 721. See ch. LXIII.
22Manley v. Saunders, 27 Mich. 347.
23See ch. LXIX.
24Wilson v. Moriarty, 88 Cal. 207, 26 Ac. 85.
25Williams v. Western Travelers' Accident Assn., 97 Neb. 352, 149 N. W. 822.
26It is sometimes called fraud. "The only fraud necessary to sustain the judgment is such as may be inferred from the failure of the defendant to correct the mistake of the plaintiff known to or suspected by the former": Wilson v. Moriarty, 88 Cal. 207, 212, 26 Ac. 85.
27 Grant Marble Co. v. Abbot, 142 Wis. 279, 124 N. W. 264.
See also, Blankenship v. Decker, 31 Mont. 292, 85 Ac. 1035.
28Hudson Structural Steel Co. v Smith & Rumery Co., 110 Me. 123, 43 L. R. A. (N.S.) 654, 85 Atl. 384.
The rule that advantage can not be taken of a known mistake has been applied to cases where the mistake was discovered after the contract had been performed by delivering the goods which were sold under a mistake as to their price, if the adversary party had not acted in reliance upon such contract other than by accepting the goods and by placing them upon his shelves.30
29 Weinhard v. Summerville, 46 Wash. 127, 13 L. R. A. (N.S.) 1089, 89 Ac. 490,
30 Cunningham Mfg. Co. v. Rotograph Co., 30 D. C. App. 524, 15 L. R. A (N.S.) 368.