Summary of Konic International Corporation v. Spokane Computer Services, Inc.
(Court of Appeals of Idaho, 1985)
Procedural History: Magistrate w/o jury ruled no contract between parties b/c lack of authority of an employee of D. P appealed to District Court. DC upheld magistrate’s judgment. P appealed to Appellate Court. Appellate Court affirms magistrate’s judgment but for different reasons.
Facts: A young employee of D agreed to purchase a surge protector for “fifty-six twenty" thinking it cost $56.20 but in reality it cost $5,620. Once D realized the mistake, they tried to return it. P refused. They went to court.
Issue: Whether a K is valid when there is a misunderstanding about the terms between parties.
Holding: Both parties attributed different meanings to the same term, “fifty-six twenty." Thus, there was no meeting of the minds of the parties since there were two meanings to a material term. We do not reach the issue of whether Young had authority to order the equipment. (attorney’s fees) Because this was a suit on a contract for the alleged sale of goods, D is entitled to an award of attorney fees on appeal as the prevailing party, even though no liability under a contract was established.
Rule of Law:
- 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. (section 20 Restatement (2nd) of Contracts (1981))
“Where a phrase of contract….is reasonably capable of different interpretations…there is no contract." (1 S. Williston, Contracts § 95 (3d ed. 1957))
3 PRINCIPLES of DOCTRINE
- “the doctrine applies only when the parties have different understandings of their expression of agreement"
- the doctrine does not apply when one party’s understanding, because of that party’s fault, is less reasonable than the other party’s understanding
parol evidence is admissible to establish the facts necessary to apply the rule. (Young, Equivocation in the Making of Agreements, 64
Colum. L. Rev. 619 (1964)
· 1st part of doctrine is applicable and corresponds to the reasoning used in Snoderly v Bower, “no meeting of the minds".
· 2nd part of doctrine applies because both parties’ understandings were reasonable. Also, both parties were equally at fault in contributing to the resulting problems.
· 3rd part of doctrine is not relevant to this case.
– The conduct of the parties reflects the formation of a contract and this being a “transaction in goods," the provisions of theUniform Commercial Code should apply.
– Raised issues on implied-in-law contract, estoppel, and mistake
The mutual misunderstanding of the parties was so basic and so material that any agreement the parties thought they had reached was merely an illusion.
– asserts D was unjustly enriched
The magistrate found no evidence establishing unjust enrichment of Spokane Computer which would support any restitution to P.
– The magistrate erred in awarding attorney fees to D.