Legal Advice on Contract Formation and Mistakes

This document provides legal advice on contract formation and mistakes in business and corporations law. It discusses the implications of mutual, unilateral, and mistake in contract enactment. It also provides case examples and references to support the information.

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

Issue
Legal advice needs to be drawn to Dan for the following issues.
Whether there is a legal contract between Mary and Dan irrespective of the presence of
mutual mistake?
Whether Michael and Dan have entered into contract for Toyota CX considering that Michael
has revoked the offer?
Whether the contract formed by Gordon and Dan is enforceable despite the fact that Dan has
mistakenly signed the contract?
Whether Edgar and Dan are bound with contract despite that Dan’s worker has negligently
put wrong sticker on the windshield of 2014 Holden Statesman.
Law
There are mainly three types of mistakes with different implications for contract enactment.
Mutual mistakes are those in which both the contracting parties are involved in the mistake.
The most common mutual mistake incurred by the parties is related to the object of the
contract. When there is a mutual mistake, then the contract would be classified as void
contract and parties would not be liable to satisfy any contractual obligations (Latimer, 2016,
p. 103). The Raffles v Wichelhaus(1864) 2 Hurl & C 906 case is the testimony of this
underlying fact that no contract would be formed between the parties when both the parties
have done mutual mistake (Carter, 2016, p. 91).
Communication of the acceptance is an essential aspect of contract formation. The offer is
considered to be valid when the offeree has received the offer letter. However, acceptance
would be said valid when the concerned offeree has posted the acceptance letter into the post
box. The verdict of Adams v Lindsell (1818) 106 ER 250 case is the evidence of this. Further,
it is noteworthy that once the original offer is accepted and same is communicated through
post, then the offeror cannot revoke the offer (Davenport and Parker, 2014, p. 114).
Unilateral mistake reflects a scenario in which only one party is at fault and makes the
mistake in the contract enactment. In this scenario, it is essential on behalf of the other
contractual party who has knowledge about the mistake to notify the mistaken party about the
unilateral mistake. The judgement of Cundy v. Lindsay (1878) 3 App. Cas. 459 case is the
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evidence of this. Further, if written contract has been signed mistakenly by one of the parties
then specific rule would be used to defend the rights of the mistaken party (Lindgren, 2014,
p. 110). These rules are highlighted in ‘non est factum.’ The contractual liabilities would be
nullified in this special rule only when there was disability existing at the time of signing of
the contract, person is not able to understand the context of the document of the contract and
signed different document (Gibson and Fraser, 2014, p. 97).
Any sticker/display which reflects the price of the object does not contain an offer unless it
has included ‘FOR SALE’ along with the respective price. Any sticker with price only
represents that that it is mere invitation to treat which means the interested parties can reach
the seller and offer their quote for the object. The seller has the rights to accept or reject the
offer of the buyer as evident from the verdict of Pharmaceutical Society of Great Britain v.
Boots Cash Chemists [1953] 1 QB 401. No contract is formed between the parties if the seller
has denied the offer from the buyer (Carter, 2016, p. 79).
Application
Mary has made an offer to purchase Honda Jazz (Assuming white colour) for $14,000 and
Dan has accepted the offer to sell Honda Jazz (Assuming red colour). Further, at the time of
contract formation, both the parties did not clarify the colour of car which is considered to be
a mutual mistake. Hence, the formed contract would be classified as void and no contractual
liability would arise for any of the parties.
Michael has offered to buy truck from Dan for $18,000 on January 2. He has also mentioned
that if Dan was ready to sell the truck for this amount then he must sign the letter and post
him back. The letter was received by Dan on January 7 and thus, the offer becomes
enforceable. On the same day, Dan has accepted offer and signed it and put the signed offer
letter into post box. The moment when he posted the acceptance for the offer then only the
acceptance become valid and contract is formed between them. Furthermore, on January 8,
Michael has changed her mind and telephoned Dan that the offer is not available for
acceptance. Here, Michael cannot cancel the offer because as per the postal rule of
communication, the acceptance became valid on January 7 and both the parties have already
entered into contract already.
It is apparent that Dan has signed the contract mistakenly because he did not have any
willingness to sell the truck which he reserved for his nephew. Further, Gordon also does not
have any knowledge that Dan has mistakenly signed the contract and hence, ‘Non-est factum’
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can be used through which Dan can defend himself from contractual liabilities. However,
there is no disability, understating or different document and hence, Dan cannot get any relief
from this special rule. It is evident that Dan has acted negligently and signed the contract
without reading and thus, contract has been enacted between Gordan and Dan.
Dan’s worker has mistakenly put the wrong sticker saying $10,000 on the windshield of 2014
Holden Stateman which does not contain any offer related to the sale of the car. Edger has
conveyed his willingness to purchase the car for $10,000. However, Dan has informed him
that it is not an offer and rather just invitation to treat. Thus, the conveyed acceptance of
Edger is actually an offer and also, Dan can reject the offer of Edgar. Thus, no contractual
liabilities are enforceable on Dan and Edger.
Conclusion
The enacted contract will be termed as void and no contractual liability would be raised on
Mary and Dan.
Michael and Dan are bounded with an enforceable contract as Dan has accepted the offer and
posted on January 7 before Michael could revoke it.
Contractual liabilities would be applicable on Dan and Gordon because Dan has signed the
contract for wrong truck in negligence.
Edgar and Dan have not enacted a valid contract because sticker on the windshield is
invitation to treat and not offer.
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References
Carter, J. (2016). Contract Act in Australia, 3rded. Sydney: LexisNexis Publications.
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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