Contracts I

Restatement Second of Contracts § 20


Effect of Misunderstanding

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  1. There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and
    1. neither party knows or has reason to know the meaning attached by the other; or
    2. each party knows or each party has reason to know the meaning attached by the other.
  2. The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if
    1. that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or
    2. that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party.