Legal Issues in Contract Formation

This document discusses various legal issues in contract formation, including the impact of mutual mistake, offer revocation, signed contracts, and invitation to treat. It provides advice and analysis on each issue and concludes with the appropriate legal outcomes.

BUSINESS AND CORPORATIONS LAW
[Document subtitle]
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[DATE]
Grizli777
[Company address]

Issues
The primary objective is to advice Dan in relation to the below mentioned legal issues.
Does mutual mistake impact the enforceability of contract between Dan and Mary?
Does revoking of offer by Michael result in formation of no legal contract with Dan?
Does signing of written contract by mistake lead to creation of binding legal contract with
Gordon?
Does the display of 2014 Holden Statesman constitute as offer or invitation to treat?
Law
A scenario where mistake has occurred on behalf of both contracting parties is referred to as
mutual mistake. Usually the common examples of this relate to the underlying subject
especially when there are oral contracts without detailing the object to be bought ot sold. As
highlighted in the verdict of Raffles v Wichelhaus(1864) 2 Hurl & C 906 case, such a mistake
leads to the contract being declared void with no liability for either party (Andrews, 2014, p.
65).
The rules of agreement formation for postal mail tend to differ from instantaneous modes of
communication such as email and fax. For an offer communicated through postal media, it
would become effective when received by the intended offeree. The acceptance on part of the
offeror becomes effective immediately when the letter indicating acceptance is posted. This
aspect has been highlighted in the Adams v Lindsell (1818) 106 ER 250 case. As a result,
attempts to revoke the offer after posting the acceptance letter would not be successful
(Davenport and Parker, 2014, p. 133).
A mistake on the part of one party only is referred to as unilateral mistake. If the other party
is aware about the mistake committed by one party, then the same needs to be communicated
as clear from the judgement in Cundy v. Lindsay (1878) 3 App. Cas. 459 case. However, in
case of mistake in signed contracts, the rules applicable are different (Lindgren, 2014, p.
119). A potential defence that may be availed by mistaken party to escape contractual
liabilities is ‘non est factum’. In order to gain relief under this, it needs to be established that
the contents could not be understood, there was special disability and actual content deviation
from assumed content is significant (Latimer, 2016, p. 139).
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The display of an object with the price tag does not amount to offer if “on sale” tag is found
missing with the object. This would be termed as invitation to treat instead of offer as has
been clarified in the verdict of Pharmaceutical Society of Great Britain v. Boots Cash
Chemists [1953] 1 QB 401. Hence, when a customer approaches the counter with the intent to
purchase the displayed object, he/she is making an offer. This offer may be unconditionally
accepted or given a counter-offer. An enforceable contract would result only if unconditional
acceptance is given at the invoice counter (Gibson and Fraser, 2014, p. 89).
Application
The scenario between Mary and Dan is representative of a mutual mistake since both are
referring to different colour cars of the same model. Considering mutual mistake regarding
the underlying object of sale, it would be fair to conclude that the oral contract would be held
as void. As a result, there is no sale of Honda Jazz.
The offer from Michael was sent through mail and became effective when Dan received it on
January 7. The letter indicating acceptance was posted by Dan on the same day i.e. January 7.
Considering the use of postal media, hence acceptance becomes effective leading to creation
of enforceable contract between Michael and Dan. The revocation of offer by Michael on
January 8 is not possible since acceptance has occurred.
The signature on the sale contract by Dan is an instance of unilateral mistake as he did not
want to sell the particular truck to Gordon. However, this mistake is not known to Gordon,
Also, since Dan has signed a written document, it is a reasonable assumption on the part of
Gordon that Dan would have read the same. A possible defence is ‘Non-est factum’ which is
unlikely to succeed. This is because the mistake has been caused on account of negligence by
Dan owing to time constraint. Therefore, the contract would be enforceable.
It is noteworthy that 2014 Holden Stateman has been displayed with a price of $ 10,000. It is
not mentioned that the car is for sale. Hence, when Edgar expresses his desire to make the
purchase, it would be only an offer and not acceptance. As a result, Dan has the legal right to
accept or reject the offer. He has given a counter offer of $ 15,000 which is not accepted by
Edgar. Hence, no contract formed in this case.
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Conclusion
The oral contract for sale of 2002 Honda Jazz would be considered as void on grounds of
mutual mistake.
An enforceable contract has been enacted between Dan and Michael before the offer could
have been revoked.
Despite the unilateral mistake, Dan would have to discharge his contractual liabilities by
selling the truck to Gordon for the agreed consideration.
No contract has been formed between Dan and Edgar regarding sale of 2014 Holden
Stateman.
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References
Andrews, N. (2014). Contract Law, 3rded. Cambridge: Cambridge University Press.
Davenport, S. and Parker, D. (2014). Business and Law in Australia, 2nded.
Sydney:LexisNexis Publications.
Gibson, A. and Fraser, D. (2014). Business Law, 8thed. Sydney: Pearson Publications.
Latimer, P. (2016). Australian Business Law, 11th ed. Sydney: LexisNexis Study Guide.
Lindgren, K.E. (2014).Vermeesch and Lindgren's Business Law of Australia, 12th ed. Sydney:
LexisNexis Publications
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