Contracts: What is an enforceable contract?
Here is a case from my Contracts class which teaches the concept of an enforceable contract–and how two parties must have the same (mutual) understanding to the terms in the contract.
Case Name, Citation Number, Author
Oswald v. Allen, US Court of Appeals 417 F.2d 43 (1969)
Plaintiff (Oswald) appealed an order from the trial court, which entered judgment in favor of the Defendant (Allen). Plaintiff believed that the contract was for the sale of coins existed in the Defendant’s coin collection.
–Allen is a coin seller of a particular Swiss coin collection.
–Oswald a coin collector negotiated for the purchase of Swiss Coins in Allen’s coin collection.
–Both met up and negotiated for the sale and purchase of Swiss coins. A contract was allegedly formed, which Oswald had a translator with him, for his language barrier, to interpret the terms of the contract.
–Oswald agreed to purchase “Swiss coins” while Allen agreed to sell ONE set of Swiss coins in his Swiss coin collection–not “Swiss coins”
–Allen refused to sell “Swiss coins” and Oswald sued thereafter
–Trial court entered judgment in favor of Allen (the Defendant)
Was there a (enforceable) contract?
When any of the terms used to express an agreement is ambivalent, and the parties understood them differently, there cannot be a contract, unless one of them should have been aware of the others understanding. Raffles v. Wichelhaus.
–“no basis for choosing between conflicting understandings” US Court of Appeals
–Restatements 201(2)(3): Go to Notes
Restatements 201(2): Where the parties have attached different meanings to a promise or agreement or a term thereof, it is interpreted in accordance with the meaning attached by one of them, if at the time the agreement was made
(a)That party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party; or
(b)that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party
(3) Except as stated in this Section, neither party is bound by the meaning attached by the other, even though the result maybe a failure of mutual assent.
There must be mutual assent to make a contract enforceable, meaning both parties need to understand the same meaning of any term in a contract. I believe that since Oswald had to use a translator to negotiate the purchase and sale the Swiss coins, he was unable to ascertain Allen’s meaning of what “Swiss Coins” actually meant to him–which was the set and not the coins.
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