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.
In most jurisdictions, an offer which contains the words which the offeror means it to contain, but which he makes because of a mistake in computation, becomes a contract on acceptance by the offeree if he does not know of such mistake.1 By reason of a miscalculation A offered cattle to B at a price lower than that at which A would have offered them, but for such miscalculation B accepted A's offer without knowledge of A's mistake. A learned of such mistake at once and notified B. It was age of such mistake if X was not A's agent. In Thwing v. Lumber Co., 40 Minn. 184, 41 N. W. 815, a contract was avoided under a similar state of facts where B's agent mislocated the property; but in this case A had misrepresented the amount of timber on it.
6 Goodrich v. Lathrop, 94 Cal. 56, 28 Am. St. Rep. 91, 29 Ac. 329.
7 Bivins v. Kerr, 268 111. 164, 108 N. E. 996.
8 Beck v. School District, 54 Colo. 546, 46 L. R. A. (N.S.) 279, 131 Ac. 398.
9 Langston v. Langston, 147 Ga. 318, 93 S. E. 899.
10 Langston v. Langston, 147 Ga. 318, 93 S. E. 892.
1 United States. Pond-Decker Lumber Co. v. Spencer, 86 Fed. 846, 30 C. C. A. 430.
Idaho. Tatum v. Coast Lumber Co., 16 Ida. 471, 23 L. R. A. (N.S.) 1109, 101 Ac., 957.
Illinois. Steinmeyer v. Schroeppel, 226 111. 9, 117 Am. St. Rep. 224, 10 L. R. A. (N.S.) 114, 80 N. E. 564; Crilly v. Board of Education, 54 111. App. 371.
Kansas. Griffin v. O'Neil, 48 Kan. 117, 29 Ac. 143.
Texas. Brown v. Levy, 29 Tex. Civ. App. 389, 69 S. W. 255.
A prepared specifications for a five-story building, which was examined by B's agent. Subsequently A changed such specifications so as to make the building a six-story building. B, without knowing of the change of specifications, and without examining the specifications again before he made his bid, made a bid for doing a certain kind of work upon such building in accordance with the specifications thereof, which bid was accepted by A without knowledge of B's mistake. The mistake was not discovered until the work was done for the first five stories of such building. When B discovered such mistake he notified A that such mistake would cost him a considerable loss; and A promised that if B would go ahead he would see that he did not "make a loss" upon such contract. It was held that B was not entitled to reformation so as to increase the contract price by the proportionate cost of the sixth floor; nor was he entitled to rescission so as to enable him to recover reasonable compensation for the work done; but that he was entitled to indemnity against any loss caused to him by such mistake, by reason of a subsequent promise. However, he could not include his prospective profits as an item of loss.8 If A prepares the plans and specifications of a building and B examines such plans for the purpose of making a bid upon plumbing, but by mistake in checking up he underestimates the amount of work to be done and makes a bid which is lower than he intends to make, and such mistake is discovered after such bid is accepted and before the performance of such contract has begun, such contract is said to be valid and enforceable, and B is said to be liable for damages for failure to perform.9 A, a contractor, requested B, a subcontractor, to bid on certain work upon a building for the construction of which A was about to bid; and suggested that B should examine the plans and specifications in the office of X. B went to X's office without his spectacles, and being unable to read the specifications, accordingly he requested X's clerk to tell him the contents of such plans and specifications. The plans were drawn on the scale of one-eighth inch to the foot; but such clerk by mistake informed B that the scale was one-fourth inch to the foot and B made his bid for about one-fourth of the amount for which he would have made it if he had known of such mistake. B discovered his mistake before performance; and refused to perform. It was held that A could recover damages for B's breach and that B was not entitled to equitable relief on the ground of mistake.10
2 Griffin v. O'Neil, 48 Kan. 117, 29 Ac. 143.
3 Tatum v. Coast Lumber Co., 16 Ida. 471, 23 L. R. A. (N.S.) 1109, 101 Ac. 957.
4 Steinmeyer v. Schroeppel, 226 111. 9, 10 L. R. A. (NJS.) 114, 80 N. E. 664.
5 United States. American Water Softener Co. v. United States, 50 Ct. C1. 209.
Minnesota. C. H. Young Co. v. Springer, 113 Minn. 382, 129 N. W. 773.
Oregon. Leonard v. Howard, 67 Or. 203, 135 Ac. 549.
Rhode Island. Southbridge Roofing Co. v. Providence Cornice Co., 39 R. I. 35, 97 Atl. 210.
Wisconsin. Grant Marble Co. v. Abbot, 142 Wis. 279, 124 N. W. 264.
6 C. H. Young Co. v. Springer, 113 Minn. 382, 129 N. W. 773; Leonard v. Howard, 67 Or. 203, 135 Ac. 549.
7 Steinmeyer v. Scbroeppel, 226 111. 9, 117 Am. St. Rep. 224, 10 L. R. A. (N.S.) 114, 80 N. E. 564; C. H. Young Co. v. Springer, 113 Minn. 382, 129 N. W. 773.
8 Grant Marble Co. v. Abbot, 142 Wis. 279, 124 N. W. 264.
9 Leonard v. Howard, 67 Or. 203, 135 Ac. 549.
10 C. H. Young Co. v. Springer, 113 Minn. 382, 129 N. W. 773. (The trial court did not find that A had learned of B's mistake before A finally made his contract for the construction of the building.)
For a similar mistake, see South-bridge Roofing Co. v. Providence Cornice Co., 39 R. I. 35, 97 Atl. 210.
In some jurisdictions, however, relief is given if the offeror was not guilty of negligence in making such mistake and if the offeree has not altered his position in reliance upon such offer.11 If A has sold goods to B, reserving the title until the purchase price is paid; and B makes default leaving nearly one thousand dollars due and unpaid, and A, by mistake in computation, believes that only six hundred fifty dollars is due and unpaid, and under such mistake A offers to sell his right in such chattels to C for five hundred twenty-five dollars, equity will give relief against such mistake if notice was given promptly before C had acted in reliance upon such offer, although after C had accepted such offer.12 If an item is omitted by reason of the ill health and nervous condition of the contractor and if the bid is thus almost thirty thousand dollars lower than the bid which the contractor meant to make and the offeree is notified of such mistake at once and thereupon accepts the next highest bid, equity will give relief against such mistake.13 If a bidder, without negligence on his part, omits the item of structural iron from his bid, and thus makes a bid which is two thousand dollars lower than he would have made if he had not overlooked such item, he may have such contract rescinded if he gives notice of such mistake in time to enable the offeree to accept another bid.14 A and B were partners; and they agreed that B should sell his interest to A on the basis of an inventory of partnership liabilities and assets. A made such inventory and by mistake in addirg the liabilities he estimated them at one thousand dollars less than the true amount. A thus agreed to pay to B five hundred dollars more than the true amount on the basis of their original agreement and he made such payment. It was held that A could have rescinded if he had acted promptly, whether the mistake was mutual or whether A had made his offer on the basis of the inventory and B had accepted without regard to the inventory; since in the latter case there would be no contract.15
11 Bromagin v. Bloonrington, 284 111. 114, 84 N. E. 700; 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.
12 Scott v. Hall, 58 N. J. Eq. 42, 43 Atl. 50.
13 Barlow v. Jones (N. J. Eq.), 87 Atl. 649.
14 St. Nicholas Church v. Kropp, 135 Minn. 115, L. R. A. 1917D,, 741, 160 N. W. 500.
15 DeVoin v. DeVoin, 76 Wis. 66, 44 N. W. 839.
409 Mistake as to an Essential Element Sec. 270