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Brief Fact Summary.
Plaintiff contracted to sell cotton arriving on a ship called the Peerless to the defendant. As it happened, there were two ships called the Peerless, and the contract did not specify which ship carried the cotton. Defendant refused to accept the cotton when it arrived, and Plaintiff sued.
Synopsis of Rule of Law.
Where a non-material term, such as mode of shipment, is ambiguous, the contract is still enforceable.
Plaintiff agreed to sell Defendant 125 bales of Surat cotton to arrive via the ship called the Peerless from Bombay. Defendant believed the shipment would arrive on the Peerless that arrived from Bombay in October. However, Plaintiff was unaware of such a ship, as Plaintiff intended that the cotton would arrive via the Peerless from Bombay in December. When the December Peerless arrived with the cotton, Plaintiff was ready and willing to deliver the cotton to Defendant, but Defendant refused to accept the cotton or pay Plaintiff for it.
Is a contract enforceable where the parties are in disagreement as to the terms dictating shipment and delivery?
No. The court found it impossible to hold the Defendant liable for breach, when his performance was rendered, according to his understanding of the contractual terms. Looking at the rule of law, as illustrated above, we can see how it was applied to the facts of this case: (1) the contractual terms were ambiguous regarding the ship, and the court first attempted to apply generally accepted terms; when that failed, because there was no generally accepted term for shipping vehicle, the court found (2) that there was no meeting of the minds as to the ship, and invalidated the contract. This was (3) a mutual mistake case because both parties were mistaken as to the thing agreed upon, and neither could be held to the terms of the contract.
Since there were two ships called the Peerless, the contract contains a latent ambiguity. Therefore, parol evidence may be introduced to prove that the parties meant different ships. This being so renders the contract nonbinding.
Ambiguous terms that are not material to the agreement will not render the contract void.