Konic International v. Spokane Computer Services

Citation: Konic Int’l Corp. v. Spokane Computer Services, Inc. 109 Idaho 527, 708 P.2d 932 (App. 1985).

Facts: Spokane Computer Services, Inc. (Spokane) instructed an employee to look into the purchase of a surge protector. A salesman from Konic Inter. Corp (Konic) made an offer to Spokane via phone conversation for a surge protector at the price of “fifty-six twenty,” by which he meant $5,620. Spokane’s employee misunderstood the price and received approval for the purchase from the appropriate authority for a price of $56.20. The order was called into Konic and a Purchase Order for $56.20 was sent through the mail. The discrepancy in price was not discovered until after the item was installed when the Spokane CEO realized that the surge protector was of much higher value than $56.20. Spokane contacted Konic stating that their had been no authority to purchase the equipment and wanted it removed. Konic responded that the equipment was Spokane’s property and expected full payment. Konic brought this action for the cost of the device.

Lower Court: 	The trial court entered judgement for Spokane based on the Law of Agency. The court held that there had been no contract between the parties because the Spokane employee that made the purchase lacked the requisite apparent authority.

Appellate Court: The Court of Appeals affirmed the judgement but on a theory of basic contract law instead of agency. Under Sect. 20 of the Restatements (2nd) of Contracts the court found there was no manifestation of mutual assent and therefore no contract. Although both parties used the same words of “fifty-six twenty,” each had a different meaning in mind. Both interpretations were reasonable under the circumstances and both parties were equally at fault for the resulting problem and therefore this was a mutual mistake. The controlling case in the matter is Raffles v. Wichelhaus, in which a contract was never made because of a mutual mistake. In Raffles, two parties agreed to have cotton transported on a ship named “Peerless” when in fact there were two different ships named “Peerless” that arrived on port at different times. Konic also argued that Spokane was unjustly enriched but the court found no evidence that this was the case.