Contract Essentials and Mistake in Contract Law

This document discusses the contract essentials and the concept of mistake in contract law. It covers issues related to offer, acceptance, and the validity of contracts. The document also provides relevant case laws and their application in different scenarios.

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

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Solution
Issue 1
Whether Dan can compel Mary to take red Honda Jazz?
Rule
In Australia, every contract is the creation of the combination of contract essentials which
consists of agreement (offer and acceptance), legal intention, consideration and party’s
capacity. All the contract essentials must be present in order to formulate an enforceable
contract in law. (Cartwright, 2014)
An offer is the contract essential which is initiated by an offeror. It is a statement/proposal
transferred from an offeror to an offeree specifying the acts or omissions desired and
expected to be confirmed by an offeree. It is only when the offer is communicated to an
offeree that an offer is considered to be complete. (Cartwright, 2014)
When the offer is communicated to an offeree, then, an offeree can accept/reject the offer. An
acceptance is the confirmation made by the offeree to an offer. An acceptance is valid
when no changes are brought in to the offer and an offer is the mirror image of the offer
(Trentham v Luxfer , 1993). (Teacher, The Law Teacher , 2018)
Now, any acceptance made by mistake is no acceptance in law. When the offeree gave his
consent to a subject matter which in fact is not what is conceived by the offeree while
giving the assent then such an assent is made under mistake and is thus invalid and is
held in (Bell v Lever Bros Ltd , 1932). The mistake must be such that goes to the root of
the contract and it is then the contract stands invalid in law. (Teacher, 2019)
Application
Dan is carrying on trading in cars. He wishes to sell a white Honda Jazz. He put a white car for
sale @ $ 14 999. Mary saw the white car and offered to pay $ 14 000 for the car,
however, she did not mention that she is making the offer for the white car. Dan thought
that Mary is intending to buy another Honda Jazz which is of red color.
Now, an offer is made by Mary who was accepted by Dan, however, the offer and acceptances
are made for the subject matter which is the root of the contract. But, both the parties are
at mistake to the subject matter. Thus, this is a mistake and the acceptance is not
considered to be valid in law as it is given against the offer which was intended in a
different manner.
Conclusion
Since the acceptance made is not in correspond to the offer and there is mistake to the subject
matter of the contract, thus, there is no contractual relationship.

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Issue 2
Is Michael obligated to take the delivery of the truck from Dan?
Rule
An offer and an invitation to treat are the two terminologies that are part of the contract law but
have different application. An invitation to treat is an act wherein offers are invited from
general or specific persons. The persons (offeror) make offers based on invitations and
the inviter (offeree) when confirms the offer results in agreement formation. An
advertisement is an invitation and is held in (Gibson v Manchester City Council, 1979).
(Burrows, 2018)
In contract law, an acceptance must be made by an offeree and it is only when the offeror is
aware of the acceptance that results in binding agreement, but, as per (Adams v Lindsell ,
1818) when any confirmation is made by post then the acceptance is complete
immediately, that is, at the time of post. (Latimer, 2012)
Application
An advertisement is posted by Dan for the same of a CX Toyota Truck for @ $ 20 000. It is an
invitation to treat as per (Gibson v Manchester City Council, 1979) and Dan acts like an
offeree (inviter).
On 2nd January Michael sent a letter and offered to buy the truck for $ 18 500. On 5th January the
letter is received by Dan and is thus a valid offer. The letter contains an acceptance
column. On 7th January, Dan signed the acceptance and resends the form through post.
So, as per (Adams v Lindsell , 1818) a valid acceptance is made by Dan on the 7th
January when the letter is posted.
On 8th January, the revocation by Michele has no effect because the revocation is made after the
acceptance is complete against Michele.
Conclusion
There is a valid contract amid Dan and Michael when the acceptance letter is posted by Dan on
7th January.
Issue 3
Is Gordon authorized to establish contract on behalf of Dan?
Rule
An employee is the person who is authorized to undertake activities on behalf of the employer.
The authority of an employer is generally of two kinds. The authority which is delegated
to an employee directly by an employer is actual authority. But, when the authority is not
granted directly but the employer represents the employee by his acts in front of third
parties that the employee does have the authority, then such authority is called apparent

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authority and the acts under such authority is binding upon the employer (Panorama
Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd , 1971).
Application
The salesperson of Dan is only permitted to undertake contract which are initially signed by the
clients. However, when Dan himself signed the contract before the same are signed by
the customers, then, it is a kind of apparent authority that is grated to the salesperson and
any contract undertaken by the salesperson based on such sign contract is binding on
Dan.
Thus, when the salesperson uses the signed contract of Dan and enters into a contractual
relationship with Gordan, then, an impression is given to Gordan that the salesperson is
the authorized representatives of Dan. Thus, the contract by the salesperson with Gordan
is valid.
Conclusion
The contract with Gordan is valid as the same is initiated by the salesperson under his ostensible
authority.
Issue 4
Is Dan obligated to honor the contract with Edgar?
Rule
An invitation to treat is an act wherein offers are invited from general or specific persons. The
persons (offeror) make offers based on invitations and the inviter (offeree) when confirms
the offer results in agreement formation. An advertisement is an invitation and is held in
(Great Peace Shipping Ltd v Tsavliris Salvage International) Ltd , 2003). (Burrows,
2018)
Application
An advertisement is issued by Dan wherein he is willing to sell his 2014 Holden Statesman for
$10,000. So, the advertisement is an invitation ( (Gibson v Manchester City Council,
1979).
An offer is made by Edgar for $ 10 000. However, there is no acceptance that is given by Dan as
he believes that there was a misprinting. So, no acceptance is given against the offer.
Conclusion
There is no contract amid the parties as the offer by Edgar is never accepted by Dan.

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Bibliography
Adams v Lindsell (1818).
Bell v Lever Bros Ltd (1932).
Burrows, A. (2018). A Casebook on Contract. Bloomsbury Publishing.
Cartwright, J. (2014). Formation and Variation of Contracts: The Agreement, Formalities,
Consideration and Promissory Estoppel. Sweet & Maxwell.
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd (1964).
Gibson v Manchester City Council (1979).
Great Peace Shipping Ltd v Tsavliris Salvage International) Ltd (2003).
Latimer, P. (2012). Australian Business Law 2012. CCH Australia Limited.
Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd (1971).
Teacher, T. L. (2018, March). The Law Teacher . Retrieved March 28, 2019, from The Law
Teacher : Cases On Formation Of A Contract Offer
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
Trentham v Luxfer (1993).