Mutual Assent
I.
The Basis of Contractual Obligation—Mutual Assent
A. Restatement’s requirements for formation of contract
1. Refers to the concept of a “bargain” to which parties express their “mutual assent”
a. However, contract can be formed even when the parties do not engage in a
bargaining process
2. It is possible that one person can incur legal obligations to another even though they
have not entered into a consideration-supported contract
3. Even if a contract has been formed, the analysis is not finished
a. Considerations regarding misconduct, fraud, duress, etc. may relieve a party
of their contractual obligations
B. Intention to be bound: The Objective Theory of Contract
a. Many courts suggest a contract requires a “meeting of the minds”
b. Subtle but important distinction between “mutual assent” and “meeting of the
minds”
i. Meeting of the minds = intention of the party = subjective
ii. Manifestation of mutual assent = looks at conduct of parties from the
perspective of a hypothetical person = objective
C. Post Ray v. Eurice Notes
a. The objective theory of contractual intent
b. Credibility of the parties
c. Nature of the parties
d. Disparity in bargaining power
e. Does the signing party have a “duty to read” what she signs?
f. Is the promisor serious?
Mutual Assent
Ray v. William G. Eurice & Bros., Inc.
I.
A contract may still be enforced even though one of the parties made a unilateral
mistake in interpreting the agreement.
II.
Mr. and Mrs. Ray (the Rays) (plaintiffs) owned a piece of property on which they wanted
to build a home. The Rays submitted plans and a rough draft of specifications to William
G. Eurice & Bros., Inc. (Eurice corporation) (defendant) so that the latter could place a
bid on the property. The Eurice corporation employed experienced builders and had
previously entered into numerous contracts to build homes.
III.
Mr. Ray and John Eurice, a representative of the company, met on January 9 and
reviewed seven pages of specifications. Changes were discussed and agreed to, all of
which were noted on the seven pages of specifications by Mr. Ray. John Eurice left with
a copy of the plan and the corrected specifications for the purpose of making a bid. The
Eurice corporation submitted its bid on February 14, which included three pages of
specifications that did not agree in many ways with those discussed on January 9.
IV.
The final contract, drafted by the Rays' lawyer, referenced five pages of attached
specifications, which were clearly delineated in the contract and referred to by
designation, number of pages, and date. The five pages of specifications were derived
from the January 9 seven pages of specifications, as corrected to reflect the changes
that Mr. Ray and John Eurice had discussed. The contract additionally stated that no
deviation from the specifications was allowed without Mr. Ray’s express permission.
V.
Mr. Ray, John Eurice, and Henry Eurice, secretary of the Eurice corporation, met and
signed the contract. Mr. Ray left a copy of the contract, including the specifications, with
John and Henry Eurice. Mr. Ray submitted the building plan, which included the five
pages of specifications, to the bank for the purpose of obtaining financing. Due to a
mistake, neither the plan nor the specifications submitted to the bank included any
signatures from the Eurice corporation.
VI.
John Eurice therefore signed the back pages of the plan, as well as those of the
specifications, and submitted them to the bank. He did not look at the pages before
signing them. On May 8, Mr. Ray met with Henry Eurice. Henry Eurice stated that he
had never seen the specifications and refused to build according to them. John Eurice
stated that he did not see the specifications until two weeks after he signed the contract.
Both Henry and John Eurice maintained that, when they signed the contract, they
thought were agreeing to the three pages of specifications in their bid.
VII.
The Eurice corporation refused to honor the contract, and Mr. Ray filed suit. The trial
judge determined that there was mutual mistake because the parties had in mind
different specifications when they signed the agreement. The trial court found in favor of
the Eurice corporation. The Rays appealed to the Court of Appeals of Maryland.
VIII.
Can a contract be enforced if a party has made a unilateral mistake in interpreting the
agreement?
Mutual Assent
a. Yes. One who signs a contract, whether he reads it or not, is thereby bound, absent
fraud, duress, or mutual mistake. A contract is enforceable despite one party’s
unilateral mistake. This means that one is bound by a contract he signs, even though
he may act negligently in signing because he did not know the terms of the contract or
of its proper interpretation.
b. One’s claimed intent when interpreting a contract is immaterial if the clearly expressed
language of the contract is unambiguous. Additionally, one may not introduce parol
evidence for the interpretation of clearly expressed language in the contract. Contract
terms are interpreted objectively, which means that the meaning of the contract is
determined by what a reasonable person would think the contract means.
c. In the current matter, it is not reasonable to assume that the Eurice corporation, their
employees having been builders their entire adult lives and having entered into
numerous contracts to build homes, would enter into a contract to build a home without
knowing the specifications.
d. Additionally, the February 14 specifications are clearly delineated in the contract. The
contract refers to them by designation, number of pages, and date. The contract states
explicitly that no deviations from the specifications are allowed without the express
permission of the owner.
e. Furthermore, a reasonable person could not assume that the three-page specifications
were part of the contract, because they were not a separate writing attached to the
contract or even present when it was signed. The contract explicitly referred to a
separate writing that was attached to it. The five pages of specifications were a
separate writing attached to the contract. The three pages of specifications were not
present during the contract signing, and were also an integral part of, not separate
from, the Eurice corporation’s proposal.
f.
Additionally, John Eurice specifically signed the back page of each of the five pages
of specifications when asked to do so by the bank. It is immaterial that he did not read
or even look at these specifications. All of these facts are evidence that the only
mistake present is a unilateral mistake by Eurice corporation thinking that it was
consenting to its own specifications.
g. Because this was merely a unilateral mistake, the contract remains enforceable.
Accordingly, the decision of the trial court is reversed.