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A motorcycle collector and his friend had known each other for years. The collector sent a letter to the friend that said, «I am willing to sell you my oldest motorcycle for $4,000.» The friend sent the collector an email saying, «I accept your offer.» The collector owned three motorcycles: a 1985 model, a 1987 model, and a 1992 model. The friend did not know about the 1985 model, which was the one the collector intended to sell. The collector was unaware that the friend intended to buy the 1987 model. When the collector tendered the 1985 model, the friend refused to accept it.
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A is incorrect. Assuming the risk of mistake is only applicable if one party is in a better position to know the risk of mistake than the other party. Neither party was in a better position to know that there was doubt over what the term in the contract meant.
C is incorrect. It is irrelevant if a reasonable person would have understood what the letter was referring to; this is not a requirement needed for mutual mistake.
D is incorrect. Because neither party was aware of ambiguity in the contract, there is no contract to breach.