Reed owned a small photography store and purchased his price label products from Monarch. Over a period of years, Reed ordered no more than 4,000 labels at a time from Monarch. While preparing a new order form for labels, Reed was interrupted by a customer and wrote “4MM” on the order form instead of “4M.” In the industry, 4M means 4,000 labels, while 4MM means 4 million labels. Reed sent the mistaken order to Monarch. Despite the course of past dealings and the fact that the maximum order that Monarch had ever received from a single customer was 1 million labels, Monarch proceeded to produce and deliver 4 million labels to Reed. Reed refused delivery and defended on the basis of mistake.

CASE QUESTIONS

1. Who prevails and why?

2. Is this a unilateral or mutual mistake? What’s the difference?