Enforceability of Contracts and Mistakes in Business and Corporations Law

BUSINESS AND CORPORATIONS LAW
[Document subtitle]
1
[DATE]
STUDENT ID:
[Company address]

Issue
There are four major issues based on the given scenarios which are highlighted below.
 Whether the contract would be enforceable on Mary and Dan despite of the involvement
in the mutual mistake regarding the colour of Honda Jazz.
 Whether revocation of the offer on the part of Michael would be successful or not
considering the postal mode of communication.
 Whether the negligent conduct of Dan and making of unilateral mistake would impact the
contract enforceability with Gordon.
 Whether the wrong display by Dan’s worker would be considered as offer or invitation to
treat.
Law
When a mistake in contract formation has been made by both parties, then the mistake is
termed as mutual mistake. According to the judgement announced in Raffles v
Wichelhaus(1864) 2 Hurl & C 906 case, the presence of mutual mistake by contracting
parties leads the contract being termed void. This is especially the case when mistake
happens in terms of the underlying object put up for sale. As a result of this, contract
liabilities would not be applicable on the parties (Davenport and Parker, 2014, p. 113).
Postal media of communication may be used for contract formation. In this medium, the offer
gets enforceable when the respective offer letter reaches the offeree. However, this is not
essential in case of acceptance enforceability because the acceptance become legally valid
when the acceptance is conveyed through postal media. In other words, when the offeree
sends the offer through post then the acceptance become enforceable and once the acceptance
letter is posted then the offeror cannot revoke the offer. The verdict of Adams v Lindsell
(1818) 106 ER 250 case is the testimony of this aspect (Edlin, 2015, p. 95).
When only one party is involved in the mistake in contract formation then it is termed as
unilateral mistake. Further, if the other party has knowledge regarding the mistake of the
party, then the same must be conveyed to the mistaken party as highlighted in Cundy v.
Lindsay (1878) 3 App. Cas. 459 case (Richard, 2015, p. 114). Non est factum is special rule
which provides relief to mistaken party only when the party has any kind of disabilities,
understanding issues at the time of contract signing or has signed drastically different
2