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In: Finance

Under the Restatement, if the parties to a contract attach materially different meanings to their manifestations...

Under the Restatement, if the parties to a contract attach materially different meanings to their manifestations and neither party knows or has reason to know the meaning attached by the other:

a. and neither party is to blame, there is no contract at all.

b. and both parties are to blame, there is no contract at all.

c. and one party is to blame, that party will be held responsible, but the contract is not void.

d. All of these.

Solutions

Expert Solution

According to Restatement 2d version, If the parties to a contract attach materially different meanings to their manifestations and neither party knows or has reason to know the meaning attached by the other. There is no mutual assent and no contract. Both parties are blameless.

The answer will be Option a.)

Neither party is to blame, there is no contract at all

A famous case involving this problem is Raffles vs Wichelhaus, 2 Hurlstone and Coltman 906(1864), popularly known as the "Peerless Case"

A contract was made to buy 125 bales of cotton to arrive on the ship Peerless from Mumbai. There were 2 ships by the name of Peerless, each sailing from Mumbai, one in December and one in October. The seller had in mind that the ship sailed in December while the buyer assumed it to be October. Neither party was at fault, but both believed in good faith that a different ship was intended. The court believed that no contract existed. The Restatement, Section 20, is in accord.

jeff jeffy answered 1 year ago
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