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 offeree knows that the terms of the offer do not express the real intention of the offeror, and the offeree seeks to take advantage of such mistake by accepting the offer, the offeree can not bind the offeror by accepting such contract.1 If a telegram, as transmitted, shows on its face that some error has been made, the offeree can not accept and bind the offeror; nor can he hold the telegraph company liable.2 Thus an offer by telegraph as received was so worded as to imply that the price of certain oranges was one dollar and sixty cents; but the party receiving it knew that it meant two dollars and sixty cents. It was held that he could not accept such offer and bind the sender; and that accordingly if the sender accepted the price of one dollar and sixty cents he could not throw the loss on the telegraph company.3 A offered to sell bolting cloth to Bat "five cents
* a yard that (another vendor) would charge you." The word "less" was omitted, and "that" was written in place of "than." B knew that such mistake had been made, but tried to bind A, by accepting the offer, to sell the cloth at five cents a yard. It was held that no binding contract existed.4 If by mistake a bid is offered and the offeree knows that a mistake has been made, he can not bind the bidder by acceptance of such bid.5 A made a written offer to a city to construct a public work. By a clerical mistake of A's engineer, certain items were bid at too low a price, in one instance the bid being one dollar and fifty cents a cubic yard for work fairly worth fifteen dollars a cubic yard, which was the bid intended. The city knew of such mistake, and attempted to accept the offer as written. Before such acceptance, A notified the city of the mistake and demanded that the bid be corrected, or that it be withdrawn. It was held that no contract was created by such attempted acceptance.6 One who enters into a contract to furnish material for a building which the adversary party has agreed to construct, knowing that the architect has changed certain specifications which he has authority to change, and that the adversary party is ignorant of such change, can not enforce such contract, especially if the adversary party repudiates liability thereunder before such contract has been performed.7 If the contractor understands that the specifications call for roofing material for one building only, and the owner of the building knows that other contractors have made a similar mistake and that the contractor's bid is for many hundred dollars less than the cost of material for the two buildings, such mistake avoids the contract, and the contractor may recover a reasonable compensation for such material and work.8 If A and B make a compromise which A enters into because he has forgotten a certain item, and B knows and takes advantage of such mistake, such contract of compromise may be set aside, but A can not have the amount of such forgotten item added to the amount fixed by such contract.9 If A intends to offer to B one dollar per one thousand feet for cutting timber, but by a clerical mistake the written contract fixes the compensation at ten dollars per thousand, and B knows of such mistake, B can not recover more than the contract price after performance.10 If A makes an offer for one hundred sixty dollars, intending to make it for two hundred sixty dollars, and B accepts, knowing of A's mistake or having reason to know thereof, no contract exists; and A may replevin from B the property delivered under such contract of sale.11 If A made an oral offer to B for four thousand dollars and subsequently submitted a written proposition in which by mistake the price was fixed by mistake at about three thousand dollars, and B accepted, knowing of such mistake, no contract exists.12 If A has entered into a contract with B's parents for the purchase of their land, knowing that such contract is unenforceable because the written memorandum thereof is incomplete, and A takes advantage of B's belief that such contract is valid, and enters into a contract with B in consideration of waiving his rights under such contract against B's parents, B may avoid such contract.13 If A knows that B enters into a contract by which he agrees to sell land to A, believing that he will secure an option from A on an adjoining tract of land, when A knows, in fact, that B will not be able to secure such option, B may avoid such contract.14 If an agent of a life insurance company inserts the figures "1000" in a blank left for the guaranteed cash value of the policy, when it was intended to insert the figures "408," and the insured knows that the amount inserted is unusually large, he can not take advantage of such mistake, especially if he is advised of such mistake about four years after the policy is issued and if he continues payment of premiums after receiving such notice.15 If the owner of a vessel effects insurance thereon after it is lost, knowing of such loss, the insurance company is not bound by such contract.16
1 United States. Moffett, etc., Co. v. Rochester, 178 U. S. 373, 44 L. ed. 1106 [reversing 91 Fed. 28, 33 C. G. A. 310; which reversed, 82 Fed. 255].
Arkansas. Irwin v. Nichols, 87 Ark. 97, 112 S. W. 209.
California. Germain Fruit Co. v. Telegraph Co., 137 Cal. 598, 59 L. R. A. 575, 70 Ac. 658; Harding v. Robinson, 175 Cal. 534, 166 Ac. 808.
District of Colombia. Cunningham Mfg. Co. v. Rotograph Co., 30 D. C. App. 524, 15 L. R. A. (N.S.) 368.
Georgia. Singer v. Match Co., 117 Ga. 86, 43 S. E. 755.
Indiana. Mummenhoff v. Randall, 19 Ind. App. 44, 49 N. E. 40.
Iowa. Hill v. Victora, 180 la. 417,161 N. W. 72.
Kentucky. Mercer v. Hickman-Ebbert Co. (Ky.), 32 Ky. Law Rep. 230, 105 S. W. 441.
Maine. Hudson Structural Steel Co. v. Smith & Rumery Co., 110 Me. 123, 43 L. R. A. (N.) 654, 85 Atl. 384.
Minnesota. Tyra v. Cheney, 129 Minn. 428, 152 N. W. 835; Johnson v. Olsen, 134 Minn. 53, 158 N. W. 805.