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.
If the adversary party has changed his position in reliance upon the contract, the party who made such mistake can not avoid the transaction.1 If A, who is B's creditor, by reason of his mistake as to the amount which B owes to A, surrenders to C a written guaranty of B's account to A, and B is then solvent, A can not avoid such contract and enforce the original contract of guaranty after B has become insolvent.2
In some jurisdictions great importance is attached to the fact that notice of the mistake has been given before the adversary party has changed its position in reliance upon the offer.3 If an offer is made by mistake, and such mistake is discovered by the person to whom the offer is made after he has accepted the offer, but before performance of such contract, there is some authority for holding that the terms of such contract consist of the offer intended by the offeror and known to the offeree before performance, since neither party has been injured by the refusal to perform, and the only loss to the offeree is his loss of anticipated profits.4 If a stenographer of the vendor made a clerical mistake in writing a letter by which potatoes were quoted at thirty-five cents a bushel, when the vendor meant to offer them at fifty-five cents a bushel, and the seller accepted such offer, and learned of such mistake after the contract was made and before the potatoes were delivered, it was held that the purchaser was liable for fifty-five cents a bushel if he accepted and used such potatoes, since under such circumstances there was no contract in the first instance.5 A ordered an organ from B, understanding that the price therefor was seventeen hundred and fifty dollars; and B forwarded such organ, understanding that the price was twenty-three hundred dollars. Before the organ arrived A learned of the mistake and with knowledge of the price which B expected to receive A took the organ from the carrier and set it up. It was held that A was liable for the price which A knew that B expected to receive for such organ.6 If the vendor makes an offer by letter in which he states that the price of certain postal cards is fifteen dollars a thousand, but that he is making a special price to jobbers of one dollar a thousand, and the vendor really intended to offer such cards at ten dollars a thousand, the lower price being inserted by a clerical mistake, and the seller discovered such mistake after the goods were received and placed on his shelves, but before he had taken other action in the matter, it is held that no contract exists; and that if the purchaser refuses to return such goods, he must pay the price at which he knows the seller offers them.7 The fact that realty which has been sold has depreciated in value has been held not to be such a change of position as to prevent the purchaser from obtaining rescission of a conveyance on the ground that he had thought that the lot which he was purchasing was a different lot from that described in the contract and in the deed.8 . In many jurisdictions relief is denied for mistake by which the offeror has made an offer which he would not have made but for such mistake, and which has been accepted by the offeree; but in reliance upon which no action has been taken when notice of the mistake is given.
5 See Sec. 1553.
1 Field v. Sutherland, 136 la. 218, 13 L. R. A. (N.S.) 576, 113 N. W. 770; United States Horseshoe Co. v. American Express Co., 250 Pa. St. 527, 95 Atl. 706.
2 Field v. Sutherland, 136 la. 218, 13 L. R. A. (N.S.) 576, 113 N. W. 770.
3 Werner v. Rawson, 89 Ga. 619, 15 S. E. 813; St. Nicholas Church v. Kropp, 135 Minn. 115, L. R. A. 1917D, 741, 160 N. W. 500; Scott v. Hall, 58 N.
J. Eq. 42, 43 Atl. 50; Barlow v. Jones, - N. J. Eq. - , 87 Atl. 649.
4 Cunningham Mfg. Co. v. Rotograph Co., 30 D. C. App. 524, 15 L. R. A. (N.S.) 368; Mummenhoff v. Randall, 19 Tnd. App. 44, 49 N. E. 40; St. Nicholas Church v. Kropp, 135 Minn. 115, L. R. A. 1917D, 741, 160 N. W. 500; Estey Organ Co. y. Lehman, 132 Wis. 144, 11 L. R. A. (N.S.) 254, 111 N. W. 1097.
The fact that the mistake is discovered before anything has been done under the contract, seems to be regarded as immaterial; and unless the mistake is such that the contract would have had no legal effect even after performance, the parties are bound by such contract, even though the mistake is discovered in time to prevent any action thereunder.9 If a contractor makes a bid under a mistake as to the amount of work which is called for by plans and specifications, he is bound by such contract, although the mistake was discovered before performance.10 If a bid is made through a mistake in addition, and such bid is accepted, the contractor is held bound thereby, even though he discovers the mistake at once and promptly notifies the offeree before anything has been done under the contract.11 A party who is guilty of negligence in omitting to read a written contract and who discovers the mistake when the goods are sent to him, can not avoid such contract by refusing to accept such goods.12
5 Mummenhoff v. Randall, 19 Ind. App. 44, 49 N. E. 40.
6 Estey Organ Co. v. Lehman, 132 Wis. 144, 11 L. R. A. (N.S.) 254, 111 N. W. 1097.
7 Cunningham Mfg. Co. v. Rotograph Co., 30 D. C. App. 524, 15 L. R. A. (N.S.) 368.
8 Goodrich v. Lathrop, 94 Cal. 56, 28 Am. St. Rep. 91, 29 Ac. 329.
9 Steinmeyer v. Schroeppel, 226 111. 9, 10 L. R. A. (N.S.) 114, 80 N. E. 564; C. H. Young Co. v. Springer, 113 Minn. 382, 129 N. W. 773; Leonard v. Howard, 67 Or. 203, 135 Ac. 549.