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 parties enter into a contract which is fairly susceptible of two meanings, and one of the parties places one of such meanings upon the contract while the other party places the other meaning thereon, neither party knowing of the meaning which the other attaches to the contract, no contract exists.1 If a contract for the sale of an engine contains a guaranty
2 Newton v. Tolles, 66 N. H. 136, 49 Am. St. Rep. 683, 9 L. R. A. 50, 19 Atl. 1092.
3 McComb v. Gilkeeon, 110 Va. 406, 66 S. E. 77.
4 Calhoun v. Tea*, 106 La. 47, 30 So.
5 Cawley v. Jean, 189 Mass. 220, 75 N. E. 614.
6 Ladd v. Pleasants, 39 Tex. 415.
7 Yost v. Mallicote, 77 Va. 610; Hall v. Graham, 112 Va. 560, 72 S. E. 105.
8 Pratt v. Bowman, 37 W. Va. 715, 17 S. E. 210. The vendee had sold the land to a bona fide purchaser.
9 Ivereon v. Wilburn, 65 Ga. 103.
10 Welch Pub. Co. v. Johnson Realty Co., 78 W. Va. 350, L. R. A. 1917A, 200, 89 S. E. 707.
1 England. Falck v. Williams (1900), A. C. 176.
Arkansas. Cage v. Black, 9T Ark. 613, 134 S. W. 942.
California. Peerless Glass Co. v. Pacific
397 Mistake as to an Essential Element
Sec. 264 that it shall develop a certain "actual horsepower," and the buyer understands that this means that no deduction is to be made for friction of the belting, while the buyer understands that it means working efficiency, and neither party knows of the other's understanding, there is no meeting of the minds and no contract.2 If a contract is made by which goods are to be sold and shipped by rail, and the contract provides " freight allowance to Los Angeles from Converse is seventy-four cents," and the seller understands that such provision is merely for the information of the buyer, while the buyer claims that such term, in accordance with business usage in California, means an amount to be deducted from the invoice and paid by the buyer, it was held that if the term had no ascertainable meaning, and could have been fairly understood by the parties in a different sense, and if it was so understood, there was no agreement; but that if the buyer's interpretation of such contract was correct but the seller was in fact mistaken as to the meaning of such clause, the seller was obliged to pay the freight upon the goods up to the time that the buyer learned of the interpretation which the seller put upon the contract; and that from that time on the buyer was not acting in good faith but was lying in wait for the seller.3 An offer to sell rice, "two hundred sacks • • • highly graded, $5.75 f. o. b. here," which is accepted by a telegram, "ship one hundred seventy sacks rice instructions in letter," is not a valid contract to sell at such price per barrel, if there is no established trade usage which makes such quotation equivalent to a quotation of prices per barrel, although the offeror meant to quote prices per barrel; while the offeree without knowledge of such mistake was accepting at such price per sack. On the other hand, by reason of the ambiguity in indicating the unit of quantity upon which the price was fixed, no valid contract is entered into between the parties. Accordingly, if the rice is shipped after the mistake in price is discovered and the purchaser accepts it and pays under protest the draft for the price at the rate intended by the seller, he can not recover such difference.4 If a code message is so drawn as to be susceptible of two meanings, no contract exists if the offeror intends one meaning and the offeree intends the other meaning.5 If by an ambiguity in A's letter A's offer of $2,000 was understood by B as an offer of $35 an acre for sixty acres, no contract exists for which specific performance will be granted.6 If a contract provides for payment for land in a stock of goods, "to be invoiced at cost marks now on goods," and the person who is to accept such goods as payment understands that such cost marks represent the wholesale price, while the owner of such goods knows that such cost marks are much greater than the actual cost of the goods, such contract is not binding upon the person who is to accept such goods, on the theory of mistake if the adversary party did not know of such understanding, and on the theory of fraud if he knew of such understanding and sought to take advantage thereof.7 An offer to remove "our business" to a certain town in consideration of certain specified concessions, does not amount to a contract on acceptance by the offeree if the offeree understands the offer to contemplate the removal of the entire plant of the offeror, while the offeror intends to remove only a part of his plant.8
Crockery and Tinware Co., 121 Cal. 641, 54 Ac. 101.
Massachusetts. Wheaton Building & Lumber Co. v. Boston, 204 Mass. 218, 90 N. E. 598.
Michigan. Board of Trade v. De Bruyn, 138 Mich. 187, 101 N. W. 262.
2 Winnemucca Water & Light Co. v. Model Gas Engine Works, 179 Ind. 542, 101 N. E. 1007.
3 Peerless Glass Co. v. Tinware Co., 121 Cal. 641, 54 Ac. 101.
Many of the mistakes as to the identity of the subject-matter are due to ambiguities in the name which is used, so that it is taken in one sense by one party and in the other sense by the other party.9
If the offer is so worded as to be susceptible of but one meaning, liability under the contract which is made by the offer and acceptance can not be evaded on the ground that a different meaning was, in fact, attached to the offer by one of the parties thereto,10 unless the adversary party knew that such meaning was attached to the contract, and permitted the party who attached such meaning to alter his position in reliance on the meaning thus understood.
4 Case v. Black, 97 Ark. 613, 134 S. W. 942.
5 Falck v. Williams (1900), A. C. 176.
6 Burkhalter v. Jones, 32 Kan. 5, 3 Ac. 569. A stated that he did not want to pay over $2,000 and thought $35 an acre a big price and that was what it would cost with taxes. B accepted, thinking that his offer was for $2,100. On B's refusing to deliver the deed without receiving $2,100, A sued for specific performance which was refused; the court seeming to hold that A might have a right of action at law, and saying: "In strict law and by the words of the letters of the parties, we think that the parties made a contract; but we also think that in fact and in equity, the minds of the parties never came together; that they really never agreed to the same thing; and therefore in equity and good conscience they did not make a contract or at least they did not make such a contract as equity should adjudge to be specifically enforced." Burkhalter v. Jones, 32 Kan. 5, 13, 3 Ac. 559.
7 Warren v. Milter, (la.), 99 N. W. 127.
8 Board of Trade v. De Bruyn, 138 Mich. 187, 101 N. W. 262.
9 Raffles v. Wichelhaus, 2 H. & C. 906.