Summary of Raffles v. Wichelhaus, 2 H. & C. 906, 159 Eng. Rep. 373 (Ex. 1864).

Facts
Raffles (P) contracted to sell 125 bales of Surat cotton to Wichelhaus (D). The goods were to be shipped from Bombay to Liverpool, England on the ship Peerless. Neither party was aware that there were two ships names Peerless carrying cotton from Bombay to Liverpool, one arriving in October and the other in December. Wichelhaus thought he had purchased the cotton arriving on the October ship, but Raffles sent his cotton on December ship. Wichelhaus refused to accept delivery of the cotton arriving on the December ship and Raffles brought this lawsuit for breach of contract.

Issues
1. If a latent ambiguity arises that shows that there had been no meeting of the minds, have the parties given mutual assent to contract? 2. Is parol evidence admissible to determine the meaning each party had assigned regarding a latent ambiguity?

Holding and Rule

1. No. If a latent ambiguity arises that shows that there had been no meeting of the minds, there is no mutual assent to contract. 2. Yes. Parol evidence is admissible to determine the meaning each party had assigned regarding a latent ambiguity.

Milward
Subjective intention is of no avail unless stated at the time of the contract. The words to arrive ex Peerless only means that if the vessel is lost on the voyage the contract is to be at an end. It would be a question for the jury as to whether both parties meant the same ship called Peerless. That would be so if the contract were for the sale of a ship called the Peerless but this is only for a sale of cotton aboard that ship.

Mellish
A latent ambiguity appeared when the contract did not specify which Peerless was intended. There is nothing on the face of the contract to show that any particular ship called Peerless was meant but the moment it appears that two ships called the Peerless were about to sail from Bombay, there is a latent ambiguity. Parol evidence will be admissible for determining the actual meaning that each party assigned to that ambiguity. From the evidence presented, each party attached a different meaning to that ambiguity. If different meanings were intended on a material term of a contract, there is no mutual assent and there is no contract.

Disposition
Judgment for Wichelhaus.

Notes
Restatement (Second) Section 20(1): If the misunderstanding concerns a material term and neither party knows or has reason to know of the misunderstanding, there is no contract. Parol evidence is admissible to determine the meanings of terms when a latent ambiguity arises later. See Masterson v. Sine for another parol evidence contract law case brief in which the court held that parol evidence cannot be used to modify the terms of a contract if an agreement is complete.

http://www.lawnix.com/cases/raffles-wichelhaus.html
Brief Fact Summary. Plaintiff contracted to sell cotton arriving on a ship called the Peerless to the defendant. As it happened, there were two ships called the Peerless, and the contract did not specify which ship carried the cotton. Defendant refused to accept the cotton when it arrived, and Plaintiff sued. Synopsis of Rule of Law. Where a nonmaterial term, such as mode of shipment, is ambiguous, the contract is still enforceable. Facts. Plaintiff agreed to sell Defendant 125 bales of Surat cotton to arrive via the ship called the Peerless from Bombay. Defendant believed the shipment would arrive on the Peerless that arrived from Bombay in October. However, Plaintiff was unaware of such a ship, as Plaintiff intended that the cotton would arrive via the Peerless from Bombay in December. When the December Peerless arrived with the cotton, Plaintiff was ready and willing to deliver the cotton to Defendant, but Defendant refused to accept the cotton or pay Plaintiff for it. Issue. Is a contract enforceable where the parties are in disagreement as to the terms dictating shipment and delivery? Held. Yes. The contract was for the sale of cotton. It was immaterial by what ship the cotton arrived as long as it arrived as contracted, i.e. on a ship called the Peerless. Since the parties did not state an intention at the time of contracting as to which ship should carry the cotton, absent fraud, a written contract, good on its face, shall not be disturbed by parol evidence. Dissent. Since there were two ships called the Peerless, the contract contains a latent ambiguity. Therefore, parol evidence may be introduced to prove that the parties meant different ships. This being so renders the contract nonbinding. Discussion. Ambiguous terms that are not material to the agreement will not render the contract void.

http://www.casebriefs.com/blog/law/contracts/contracts-keyed-to-farnsworth/finding-the-law-of-thecontract/raffles-v-wichelhaus/2/