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17. Which of the following states the probable legal consequences of the correspondence between the parties?
A farmer who wanted to sell her land received a letter from a developer that stated, «I will pay you $1,100 an acre for your land.» The farmer's letter of reply stated, «I accept your offer.» Unbeknownst to the farmer, the developer had intended to offer only $1,000 per acre but had mistakenly typed «$1,100.» As both parties knew, comparable land in the vicinity had been selling at prices between $1,000 and $1,200 per acre.
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A is incorrect. There is a general rule that contract formation may be defeated, under some circumstances, where parties attach materially different meanings to a material term. That rule, however, is inapplicable here where the critical issue relates to the developer's intent, as manifested by his conduct, and the impact of the farmer's lack of knowledge of the developer's mistake. An enforceable contract requires mutual assent as determined by the parties' objective, rather than subjective, manifestations of that assent. Here, given the parties' knowledge of the price of comparable land, the developer's offer created a reasonable understanding that the developer would purchase the land for $1,100 per acre. Moreover, because the farmer neither knew nor had reason to know that the developer intended to purchase the land for only $1,000 per acre, the developer will be bound to purchase it for $1,100 per acre. Accordingly, the parties' conduct gave rise to a contract formed at $1,100 per acre when the farmer accepted the developer's offer.
B is incorrect. While a mutual mistake may give rise to an action for rescission, there was no mutual mistake in this case. The critical issue here relates to the developer's intent as manifested by his conduct, and the impact of the farmer's lack of knowledge of the developer's mistake. An enforceable contract requires mutual assent as determined by the parties' objective, rather than subjective, manifestations of assent. Given the parties' knowledge of the price of comparable land, the developer's offer created a reasonable understanding that the developer would purchase the land for $1,100 per acre. Moreover, because the farmer neither knew nor had reason to know that the developer intended to purchase the land for only $1,000 per acre, the developer will be bound to purchase it for $1,100 per acre. Accordingly, the parties' conduct gave rise to a contract formed at $1,100 per acre when the farmer accepted the developer's offer.
C is incorrect. An enforceable contract requires mutual assent as determined by the parties' objective, rather than subjective, manifestations of assent. Given the parties' knowledge of the price of comparable land, the developer's offer created a reasonable understanding that the developer would purchase the land for $1,100 per acre. Moreover, because the farmer neither knew nor had reason to know that the developer intended to purchase the land for only $1,000 per acre, the developer will be bound to purchase it for $1,100 per acre. Accordingly, the parties' conduct gave rise to a contract formed at $1,100 per acre when the farmer accepted the developer's offer.