Ray v. William G. Eurice & Bros., Inc.
93 A.2d 272 (1952)
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Rule of Law:
Absent fraud, duress, or mutual mistake, a party who signs a written contract is bound by its terms, and a unilateral mistake regarding the contract's contents does not excuse performance under the objective theory of contract formation.
Facts:
- Calvin and Katherine Ray sought to build a home and entered negotiations with William G. Eurice & Bros., Inc. (Eurice Corp.), represented by John Eurice.
- The Rays provided their own detailed seven-page set of specifications, which they reviewed and amended in a meeting with John Eurice.
- Eurice Corp. submitted its own, less detailed three-page proposal, which the Rays rejected.
- The Rays then re-typed their own specifications, incorporating the previously agreed-upon changes into a final five-page document dated February 14.
- On February 22, the parties met, reviewed the final contract and the attached five-page specifications, and John Eurice signed the contract, which explicitly incorporated the five-page February 14 specifications by name, date, and page count.
- John Eurice later signed each page of the five-page specifications again at the loan association's office.
- Weeks later, on May 8, Henry Eurice of Eurice Corp. stated he had never seen the five-page specifications and refused to build the house according to them, thereby repudiating the agreement.
Procedural Posture:
- Calvin T. Ray and Katherine S. J. Ray sued William G. Eurice & Bros., Inc. in the Circuit Court for Baltimore County (a trial court) for breach of contract.
- The trial court, sitting without a jury, found for the defendant, Eurice Corp., on the grounds that there was no meeting of the minds due to an honest mistake.
- The Rays (plaintiffs-appellants) appealed the judgment to the Court of Appeals of Maryland.
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Issue:
Does a party's unilateral mistake as to the contents of a written agreement, which they have signed, prevent the formation of an enforceable contract?
Opinions:
Majority - Hammond, J.
No. A party's unilateral mistake does not prevent the formation of an enforceable contract where they have manifested assent by signing the document. The law is clear that absent fraud, duress, or mutual mistake, one who has the capacity to understand a written document and signs it is bound by their signature. The court applied the objective theory of contracts, holding that the test for mutual assent is not the subjective intent of the parties, but what a reasonable person would conclude from their outward manifestations. Here, Eurice Corp.'s representatives read and signed a contract that unambiguously incorporated the Rays' five-page specifications by reference. Their claimed internal belief that the contract referred to their own three-page proposal is immaterial, as their signatures constituted an objective manifestation of assent to the contract's clear terms. A party cannot escape a contract due to their own negligence in failing to understand the obligations they are assuming.
Analysis:
This case is a foundational example of the objective theory of contract formation, emphasizing that a party's signature is the ultimate manifestation of assent. The court's decision reinforces the principle that contract law protects the reasonable expectations of the parties based on their words and actions, not their unexpressed, subjective intentions. By rejecting a defense based on unilateral mistake arising from negligence, the ruling promotes certainty and predictability in written agreements. The case serves as a stark reminder of the legal duty to read and understand a contract before signing it, as courts are unwilling to protect sophisticated parties from their own carelessness.
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