Brief Fact Summary. Defendant William G. Eurice & Bros., Inc., entered into a contract to build a house for Plaintiff Ray. After signing the contract, the parties disagreed as to which specifications were to be used.
Synopsis of Rule of Law. Unilateral mistake, unlike mutual mistake, does not prevent the meeting of the minds required for contract formation.
Plaintiff decided to build a house and entered into negotiations with a number of builders, including Defendant. Following an estimate from Defendant, Plaintiff had plans for the house drawn up by an architect so as to get a final bid from Defendant. Plaintiff and Defendant discussed each item of the seven page specifications drawn up by Plaintiff’s architect. During the discussion, Defendant vetoed and changed some of the specifications. These changes were noted in green ink, and a copy of the specifications was given to Defendant to make a formal written bid. Defendant drew up a three page unsigned proposed contract which contradicted many of the specifications in the seven pages previously discussed by the parties. Plaintiff informed Defendant that his attorney would draw up the contract. Based on the seven page specifications and green ink changes, Plaintiff had the specifications rewritten into a five page “Memorandum Specifications”. The parties reviewed each item of the
contract before signing. The parties later signed the reverse side of each page of the contract, five page specifications, and the plans.
Just before construction was to begin, Defendant indicated that the house could not be built according to the five page specifications for the contract price. After several attempts, the parties were unable to work out their differences. Defendant refused to perform under the contract.
Defendant claims that the contract drawn up by Plaintiff’s attorney was to be based on the three-page proposed contract and that the five page specifications were not physically attached to the contract when signed. Plaintiff states that while the specifications may not have been physically attached, the five page specifications were present and discussed at the signing.
Issue. Did the parties create an enforceable contract to build a house?
Held. Yes. The unilateral mistake of Defendant did not prevent the formation of an enforceable contract.
The Court notes that a party will not be bound by their signature where there is fraud, duress, or mutual mistake. The trial court found that the mistake as to what specifications would be used prevented a meeting of the minds, thereby preventing the formation of an enforceable contract between the parties.
On appeal, the Court viewed the mistake differently. The Court reasoned that the mistake, if any, was unilateral. The contract clearly indicated which specifications were to be used. Also, Defendant had access to the specifications and even signed the back of the specifications at one point. Because only Defendant was mistaken as to the specifications to be used, the mistake was unilateral. A unilateral mistake does not prevent the formation of an enforceable contract.
Discussion. Points of Law - for Law School Success
The rule is that if there is no fraud, duress or mutual mistake, one who has the capacity to understand a written document who reads and signs it, or, without reading it or having it read to him, signs it, is bound by his signature as to all of its terms. View Full Point of Law
In the present case, Defendant argued that a contract was not formed because the parties did not agree to the same specifications. The Court determines that the contract clearly indicated which specifications were to be used and that if there was a mistake, it was only on the part of Defendant. Because the mistake was unilateral, not bilateral, the mistake did not prevent the parties from creating an enforceable contract.