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.

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 as to the existence or identity of the subject matter of the contract.

d.

Two of the above, (a) and (b).

Answer: No contract exists due to mutual mistake of fact as to the existence or identity of the subject matter of the contract.

Explanation:

Breach of contract is legal cause of action and a type of civil wrong, whereby a binding agreement or bargained-for exchange was not honored by one or more of the parties to the agreement in the contract by non-performance or an interference with the other party's performance.

In this scenario, the buyer cannot sue for breach of contract when the goods failed to arrive on time because no contract exists due to the mutual mistake of fact as to the existence or the identity of the subject matter of the contract. There was a mistake regarding the ship "Peerless". A party had in mind the one coming by October while the other party had the one coming in December in mind. Due to this error, no contract existed.