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.
The general rules on the subject of this class of mistake are subject to the following qualifications: Every sane person is held to intend the legal consequences of his voluntary acts. Accordingly, if a person of legal capacity, and not acting under fraud, misrepresentation, duress, or undue influence, goes through the outward form of binding himself by contract, he can not avoid liability thereon by claiming that, unknown to the adversary party, he made his offer or acceptance under mistake of fact, and that he did not intend to make such offer;1 or where the mistake arises in sending a telegram from a general agent to a local agent,2 or in sending a telegram from the principal to his agent by reason of which the agent makes a contract on behalf of his principal, different from that intended by the latter,3 or A orders more than he intends to,4 and B accepts without knowledge of A's mistake, A is bound. If through mistake of the offeror's authorized agent, the offer is made in terms different from that authorized by the offeror, and the offeree accepts it without knowing of such mistake, the offeror is bound by the terms of the offer as made.5 Thus where the agent of a railroad company offered a rate of sixty-nine and one-half cents per hundred pounds for cotton, the rate being really eighty-nine and one-half cents, the railroad was bound by the offer if accepted before revocation.6 If A agrees to exchange stock in the X company for stock in the Y company which is owned by B "share for share," and such exchange is made, A can not avoid such transaction on the ground that he overlooked the fact that the stock in the X company was worth two hundred dollars a share while the stock in the Y company was worth only one hundred dollars a share, unless it is shown that B also made such mistake, or that B knew of A's mistake at the time of making such exchange.7 If an advertisement provides that the contractors must examine the drawings and make estimates for themselves, a mistake as to quantities arising out of failure to make such estimates does not render the contract invalid.8 If A impliedly promises to pay for the transportation of groceries to his farm because he believes that he has been quarantined lawfully, he is liable for the reasonable value of such transportation, even though such quarantine is not lawfully established.9 A contract between A and B is not rendered void by the fact that A enters into such contract in the belief that an appeal is pending from a judgment rendered in litigation between A and B.10 A contract of compromise of a claim for insurance is not rendered void by the fact that the insurance company was ignorant of a defense arising out of the existence of other insurance, at least if such defense could have been learned with reasonable diligence.11 Some authorities allow greater latitude in relieving against mistakes of the class discussed in this section. Thus where A, a member of a firm of quarrymen, did Hot himself know the price of monuments, and relied on the estimates of the foreman, relief was given where such foreman made a mistake in computation.12 One who orders goods from a manufacturer without inquiring the price for the current year, under the belief that the price is the same as in former years, is liable, at least, for a reasonable price for such article; and if the article is sold only by such manufacturer, the reasonable price is the current selling price.13 If goods are put up at auction subject to a reserve price and by mistake the auctioneer knocks down the property to a bidder below such reserve price, the auctioneer may withdraw such acceptance, at least if he learns of such mistake before signing a memorandum of such sale,14 and he incurs no liability to such bidder by reason of his refusal to sign such memorandum.15 A agreed that if B, a judgment creditor of the estate of X, deceased, would not proceed with suits already begun by him to recover realty sold under an execution which had issued upon such judgment, A would pay B and take assignment of such judgment if the executor of X's estate would not pay B. The entry of such judgment was defective, and the execution was so irregular as to invalidate the sale. The judgment, however, could be corrected so as to be valid. It was held that such mistake was not material to the substance of the transaction, and that A could not recover money paid to B thereunder.16 If A and B enter into a contract by which B is to buy an interest in A's engine on their joint account, and B is to repair it for a certain amount and either is to sell it on their joint account, such contract is not rendered invalid by the fact that it subsequently is discovered that it will cost far more to repair such engine than the price which was agreed upon for such repairs.17 To justify relief a mistake must be "material" under Section 1577 of the Civil Code of California.18
A. 507, 60 S. W. 429 [reversing 221 Tex. Civ. App. 568, 54 S. W. 421]; Kowalke v. Light Co., 103 Wis. 472, 74 Am. St. Rep. 877, 79 N. W. 762.
"Upon these facts, the question arises whether the mistake related to a matter that was material to the contract of settlement. The fact that the parties were justifiably ignorant of the serious injury to the plaintiff's hip does not alone show that the mistake was in respect to a material matter. Whether it was or not depends upon the intention of the parties in making the contract. If their purpose was to terminate all dispute and litigation between them in reference to the defendant's liability for negligence in causing the plaintiffs injuries, * * * the mistake as to the extent of his injuries would be immaterial." Mclsaac v. Mc-Murray, 77 N. H. 466 (472, 473), L. R. A. 1916B, 769, 93 Atl. 115 [quoted in Cogswell v. Boston & Maine R. R., - N. H. - , 101 Atl. 145].
4 Grinnell v. Wisconsin, etc., Co., 47 Minn. 569, 50 N. W. 891.
1 Cole v. Hunter Tract Improvement Co., 61 Wash. 365, 32 L. R. A. (N.S.) 125, 112 Ac. 368.
2 Cole v. Hunter Tract Improvement Co., 61 Wash. 365, 32 L. R. A. (N.S.) 125, 112 Ac. 368.
3 Cole v. Hunter Tract Improvement Co., 61 Wash. 365, 32 L. R. A. (N.S.) 125, 112 Ac. 368.
1 United States. Pond-Decker Lumber Co. v. Spencer, 86 Fed. 846, 30 C. C. A. 430; Bowers Hydraulic Dredging Co. v. United States, 41 Ct. CI. 214.
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.
Iowa. Wilson v. Wyoming Cattle & Investment Co., 129 la. 16, 105 N. W. 338.
Kansas. Griffin v. CNeil, 48 Kan. 117, 29 Ac. 143. (Where A offered B nineteen head of cattle at a rate which would have amounted to $595, but by mistake in calculation made his offer for $488.)
Michigan. Durgin v. Smith, 133 Mich. 331, 94 N. W. 1044.
Minnesota. Shanahan v. Rochester German Ins. Co., 126 Minn. 373, 148 N. W. 269.
Missouri. Haubelt v. Mill Co., 77 Mo. App. 672.
North Carolina. Borden v. Ry., 113 N. Car. 570, 37 Am. St. Rep. 632, 18 S. E. 392.
Rhode Island. Putnam v. McLeod, 23 R. I. 373, 50 Atl. 646.
South Carolina. Coates v. Early, 46 S. Car. 220, 24 S. E. 305.
"If without the plaintiff's knowledge H did understand the transaction to be different from that which his words plainly expressed, it is immaterial as his obligation must be measured by his overt acts." Mansfield v. Hodgdon, 147 Mass. 304, 306, 17 K. E. 544 [citing O'Donnell v. a in ton, 145 Mass. 461, 14 N. E. 747; Western R. R. v. Babcock, 47 Mass. (6 Met.) 346].
2 Borden v. Ry., 113 N. Car. 570, 37 Am. St. Rep. 632, 18 S. E. 392.
3Hasbrouck v. Telegraph Co., 107 la. 160, 70 Am. St. Rep. 181, 77 N. W* 1034.
4 Coates v. Earley, 46 S. Car. 220, 24 S. E. 305.
5 Borden v. R. R., 113 N. Car. 570, 37 Am. St. Rep. 632, 18 S. E. 392.
6 Borden v. R. R., 113 N. Car. 570, 37 Am. St. Rep. 632, 18 S. E. 392.
7 Wilson v. Cattle Co., 129 la. 16, 105 N. W. 338.
8 Bowers Hydraulic Dredging Co. v. United States, 41 Ct. CI. 214.
9 Plymouth Township v. Klug, 26 N. D. 607, 145 N. W. 130. (He is liable even though he makes such promise to the township board which orders such quarantine.)
10 Kirkland v. Edenborn, 140 La. 669. 73 So. 719.
11 Shan ah an v. Rochester German Ins. Co., 126 Minn. 373, 148 N. W. 269.
12 Everson v. Granite Co., 65 Vt. 658, 27 Atl. 320.
13 Bowser v. Marks, 96 Ark. 113, 32 L. R. A. (N.S.) 429, 131 S. W. 334.
14 McManus v. Fortescue , 2 K. B. 1.