The Effect of Misunderstanding on Contract Formation and Reformation Under the Restatement of Contracts Second

The presence of misunderstanding at the time of an apparent agreement creates difficult problems in the law of contract formation and equally difficult problems when the apparent agreement is in ·writing and reformation is sought. The rules formulated in the original Restatement of Contracts are unsatisfactory in both areas. The preparation of the Restatement Second, which is now under way for contracts, includes changes in the rules of contract formation but the changes emerging are no more satisfactory than the original rules. The current version of the Restatement Second, contained in Tentative Draft No. 1, accepts the objective theory of contract formation, as did the original Restatement, but the attempt to formulate general rules based on that theory contains two principal shortcomings that seem almost at cross purposes. In one aspect it limits doctrine too narrowly, so as to lead to the conclusion that there is no contract in some situations in which a contract should and almost certainly will be found. In another aspect it extends doctrine beyond permissible limits, so as to lead to a finding of contract in instances where there should be none.