Valid Contracts and Mistakes in Contract Law

This document discusses the concept of valid contracts and mistakes in contract law. It explains the importance of offer, acceptance, and consideration in forming a valid contract. The document also explores the concept of mistake and its impact on contract validity. Examples and case studies are provided to illustrate the concepts.

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Contents
Issue 1 2
Rule 2
Application and conclusion.............................................................................................................2
Issue 2 2
Rule 2
Application and Conclusion............................................................................................................3
Issue 3 3
Rule 3
Application and Conclusion............................................................................................................3
Issue 4 4
Rule 4
Application and Conclusion............................................................................................................4
Bibliography....................................................................................................................................5

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Issue 1
Whether there is a valid contract amid Dan and Mary related to Honda Jazz of red color?
Rule
As per the law of contract, every agreement is formulated when there is a valid offer and
acceptance. The agreement when sustained with consideration, lawful intention and
capability then a valid contract is formulated. (Australia, 2013)
An offeror should communicate his intention to act/omission to the offeree and when such
communication is reached to the offeree then an offer is made. When the offeree
confirms the offer then it is an acceptance and there is valid contract amid the parties.
(Australia, 2013)
However, the acceptance which is made by the offeree must reciprocate the offer terms. At times
an acceptance is made under mistake then such acceptances have no relevance in law. In
(Bell v Lever Bros Ltd, 1932) it was held that when the offeror and the offeree exchange
promises but are under mistake and which the contract essence, is then, the contract is
considered to be voidable under mistake. The avoidance of contract on the basis of
mistake by the parties is also analyzed in (Great Peace Shipping Ltd v Tsavliris Salvage
International) Ltd, 2003). (Teacher, 2019)
Application and conclusion
Dan is indulged in the business of second hand cars. Mary saw a white 2002 Honda Jazz for sale
for $ 14 999. However, she made an offer to buy Honda Jazz for $ 14 000 (without
specifying the color) which was affirmed by Dan. So, there is a valid promises amid the
parties and there is a valid contract.
But, Dan handed the keys of red 2002 Honda Jazz. It is submitted that Mary made an offer for a
white Jazz whereas Dan gave an acceptance for a red Jazz. There is a mistake and which
is the essence of the contract. Thus, the contract is made under mistake and thus can be
avoided by Mary.
Issue 2
Whether there is a valid contract amid Dan and Michael?
Rule
An advertisement is not considered as an offer. In (Partridge v Crittenden, 1968), the law
submitted that an advertisement is not an offer but is an invitation. Persons who are
interested in the advertisement must make an offer and if the advertiser accepts the same
then there is a contract amid the parties. (Gibson & Frase, 2013)

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Further, once an offer is made then the same must be accepted by the offeree. An acceptance is
complete only when the same reaches the offeror. But, when an acceptance is made by
post then as per (Adams v Lindsell, 1818) an acceptance is inclusive when the note is
posted. (Latimer, 2012)
Application and Conclusion
Dan has advertised a 2015 Toyota CX truck @ $ 20 000.
Now, as per (Partridge v Crittenden, 1968) the advertisement by Dan is a request and who so
ever is interested in the truck must made an offer to Dan.
So, Michael wanted to buy the truck and so on 2 January he posted a letter to Dan and offered to
buy the truck @ $ 18 500. Thus, a valid offer is made by Michael to Dan and the letter
reached Dan on 5th January.
Dam must make a valid acceptance in order to make a binding contract with Michael. Dam
signed the letter indicating his acceptance and posted the letter on 7th January. As per
(Adams v Lindsell, 1818) a recognition by post is valid and is absolute when posted. So,
the acceptance by Dan on 7th is complete and there is a binding contract on 7th January
itself.
The revocation by Michael on 8th January has no relevance as there is a binding contract amid the
parties on 7th January itself when acceptance is posted by Dan. It makes no difference that
the letter of acceptance reached Michael on 10th November.
Issue 3
Whether Dan is bound by the contracts that are made by the salesperson with Gordon?
Rule
When any employer grants authority to his employee, then, the employee has the responsibly to
act within such authority in able to bind the employer by his acts.
The authority which is directly granted to the employee is called the actual authority and the
authority which is impliedly granted to an employee is called an implied authority
(Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd, 1964). At time, the
employer acts in such a manner which makes the outsider believe that the employee has
the authority to bind the employer (which in reality he does not have), then such an
authority is called ostensible authority and any act by the employee within such authority
is binding upon the employer (Panorama Developments (Guildford) Ltd v Fidelis
Furnishing Fabrics Ltd, 1971).

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Application and Conclusion
Dan has employed a new salesperson but his authority is restricted and he is not permitted to
make any deals and the contracts must be brought to Dan after the same is signed by the
customers. The salesperson brought 5 contracts and Dan signed them without looking
which were later dispatched to the customers by the salesperson.
Gordon (one of the customer) came to collect the truck. He informed that he has received a
contract signed by Dan and thus there is a contractual relationship amid the two.
It is submitted that the salesperson authority is restricted by Dan. However, by signing the
contract without looking, Dan has granted an ostensible authority to the sale person and
any contract made by the salesperson within such ost5enble authority is binding upon
Dan.
So, the contract that is made by the salespersons with Gordon is under ostensible authority and as
per (Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd, 1971)
there is a binding contract amid the parties.
Issue 4
Whether Edagr4 can sue Dan for the sale of the vehicle at $10,000?
Rule
In contract law, an advertisement is an invitation (Partridge v Crittenden, 1968). The interested
party must make an offer (offeror) to the advertiser (offeree) who when accepts the offer
results in a binding contract amid the parties. (Gibson & Frase, 2013)
Application and Conclusion
Dan has advertised a 2014 Holden Statesman for $10,000. As per (Partridge v Crittenden, 1968)
an advertisement is an invitation.
Edgar saw the advertisement and made an offer to buy the 2009 Holden Statesman @ $ 10 000.’
Thus, a valid offer was made by Edgar.
But, Dan realizes that there was misprint on the sticker and that the actual price of the vehicle
should be $ 15 000. So he did not accept the offer of Edgar and refused to sell the
vehicle.
Since there was no acceptance that was made by Dan to Edgar thus there is no contract amid the
two.

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Bibliography
Adams v Lindsell (1818) 1 B & Ald 681.
Australia. (2013). Australian Corporations & Securities Legislation 2011: Corporations Act
2001, ASIC Act 2001, related regulations. CCH Australia Limited.
Bell v Lever Bros Ltd (1932) UKHL 2.
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd (1964) 2 QB 480.
Gibson, A., & Frase, D. (2013). Business Law 2014. Pearson Higher Education AU.
Great Peace Shipping Ltd v Tsavliris Salvage International) Ltd (2003) EWCA Civ 1407.
Latimer, P. (2012). Australian Business Law 2012. CCH Australia Limited.
Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd (1971) 2 QB 711.
Partridge v Crittenden (1968) 1 WLR 1204.
Teacher, T. L. (2019, March). The Law Teacher. Retrieved March 26, 2019, from
https://www.lawteacher.net/modules/contract-law/vitiating-factors/mistake/lecture.php