Raffles v. Wichelhaus

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    12-Nov-2014

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Defective Formulation and Expression of Agreement Case: Parties: Raffles v Wichelhaus (1864) 393-396 [England] Plaintiff - Raffles (seller) Defendant - Wichelhaus (buyer)

Facts: Contract entered into where plaintiff agreed to sell 125 bales of Surat cotton to defendant at 17 1/4 d. per pound within a certain time of the cotton arriving in Liverpool, on a ship "Peerless" from Bombay. So happened that there were 2 ships named "Peerless," one arriving in October, and another in December. Defendant says the contract was for the ship arriving in October, and plaintiff thought it was for the ship arriving in December. When the December "Peerless" arrived, plaintiff tried to sell it to defendant, but defendant would not accept it, saying the contract was for the October ship. Plaintiff says the actual ship used to deliver the cotton was immaterial in the contract, and the only reason the ship was names was so that if the ship has sunk enroute, the contract would be void. Issue: Whether the defendant should be bound by the agreement to buy the cotton of the plaintiff's Peerless. Holding: Judgment for defendants.

Reasoning: Though courts will strive to find a reasonable interpretation in order to preserve the agreement whenever possible, the court in Raffles could not determine which ship named Peerless was intended in the contract. Consequently, as there was no consensus ad idem (meeting of the minds, as plaintiff alleged), the two parties did not agree to the same thing and there was no binding contract. RULE: idem). There is no contract is there no is meeting of the minds (consensus ad Both parties must intend to agree on the same thing.

Restatement (2nd) 20 (1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and a. Neither knows or has reason to know the meaning attached by the other Comment C: "even though the parties manifest mutual assent to the same words of the agreement, there may be no contract because of a material difference of understanding as to the terms of the exchange."