Oswald v. Allen
Nature of the Case
Oswald (P) appealed an order which entered judgment in favor of Allen (D) in an action alleging the existence of a contract for the sale of coin collections.
Facts
Oswald (P) was a coin collector interested in Mrs. Allen’s (D) collection. Oswald did not speak English and was shown a number of different collections but was unaware that he was looking at two different collections. Allen in fact had two different collections in separate bank vaults each of which contained Swiss coins. After some negotiation, a price of $50,000 was agreed upon with neither of the parties realizing that the use of the words ‘Swiss Coins’ and the ‘Swiss Coin Collection’ were ambiguous. Oswald thought the offer he made was for all the coins that he saw and Allen thought that the offer was only for her Swiss Coin Collection.
Oswald sent a letter of confirmation indicating that the purchase included all of Allen’s coins. Allen, realizing the error, then decided that she did not want to sell the coins. The trial court dismissed Oswald’s claim after trial. Oswald appealed.
Issue
- If an essential term in a contract is ambiguous and understood by both parties to have a different meaning, under what circumstances will the contract be valid?
Holding and Rule of Law
- If an essential term in a contract is ambiguous and understood by both parties to have a different meaning, there can only be a contract if one of the parties was aware of the other’s understanding of the meaning of the ambiguous term.
The subjective assent of the parties is not normally necessary for the formation of a contract. However, there is an exception to this rule when ambiguous terms are used as a basis for assent. In such situations involving mutual mistake, there is no basis for choosing between conflicting understandings and there is no contract. There will be a contract however if one of the parties was aware of the other’s meaning. In this case the parties were not in agreement on what was being sold and neither knew of the other’s understanding.
Disposition
Dismissal affirmed.