Valid Contracts and Mistakes in Contract Law

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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)