Ray v. William Eurice & Bros., Inc. case brief summary

Ray v. William Eurice & Bros., Inc. (Classical Formalistic Theory of Contract)

FACTS
P contracted D to build a house. After P made modifications to D’s proposed specs, the full set of documents were reviewed by P and D. The K was then signed but not the specs or the prints. The specs were later by D and P at the mortgage bank. D claims that they never saw the modified specs and that they assumed that signed K referred to their original proposed specs. The trial court applied a subjective rule and found that D made an honest mistake and therefore, there was no meeting of the minds. However, the appellate court applied the objective rule and reversed the ruling of the lower court.

 

Issue: Is a party bound to his signed document if he has read it, has the capacity to understand it, and there is no fraud, duress, or mutual mistake?

 

Reason: Absent fraud, duress, or mutual mistake, a party having the capacity to understand a written document who reads and signs it, or without reading it or having it read to him, signs it, is bound by the contract. The court reasoned that since it is hard to prove subjective intent and it is unfair to the reasonable people b/c it undoes by what was unsaid. If we completely relied on subjective factors, you would have a fear of having any contract enforced. The law will hold you to your words, not to what you were thinking. The test in such a case is objective, and it follows that the test of a true interpretation of an offer or acceptance is not what the party making it though it meant or intended it to mean, but what a reasonable person in the position of the parties would have thought it meant.

 

Unilateral Mistake: The court found neither fraud nor duress in this case. If there was a mistake, it was unilateral. He is still bound by the contract.