A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay.Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay.One sailed in October and the other in December.The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December.Each party held his belief in good faith.When the goods failed to arrive on time, the buyer sued for breach of contract.In this case:
A)the seller is in breach and must pay damages.
B)the seller is guilty of fraud in the inducement for failing to disclose to the buyer which ship would contain the goods.
C)no contract exists due to mutual mistake of fact.
D)Two of the above, (a) and (b).

Question

Quizplus · Accepted Answer

Both parties had a different understanding of which ship was meant to deliver the cotton, and neither party was aware of the other's misunderstanding. This mutual mistake of fact means that the contract was never properly formed, and therefore there is no breach of contract.

A Contract Was Made for 125 Bales of Cotton to Arrive