Enforceability of Contracts and Mistakes in Business and Corporations Law

This document discusses the enforceability of contracts and the impact of mistakes in business and corporations law. It covers topics such as mutual mistakes, revocation of offers, unilateral mistakes, and invitations to treat. The document provides examples and case references to support the explanations.

BUSINESS AND CORPORATIONS LAW
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[DATE]
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[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
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document in confusion. Negligent conduct of the mistaken party especially while signing the
written contract does not provide any relief under non est factum (Lindgren, 2014, p. 110).
Any price tag which does not include any notation that highlights that the object is available
for sale constitutes as invitation to treat and not offer that is available for acceptance. This is
clarified from the judgement of Pharmaceutical Society of Great Britain v. Boots Cash
Chemists [1953] 1 QB 401 case. According to case, the tag on the medicine which
highlighted just prices was considered as invitation to treat. Further, in case of invitation to
treat, the offer can be accepted or rejected by the offeree. Contract formation would happen
only if the offer by the buyer is accepted by the seller (Pendleton and Vickery, 2016, p. 105).
Application
There is confusion between Mary and Dan about the object of sale i.e. 2002 Honda Jazz. This
arises since the exact colour has not been specified by any of the parties. Hence, a mutual
mistake has developed whereby the seller (Dan) and buyer (Mary) are referring to different
vehicles of the same model i.e. 2002 Honda Jazz. Considering the fundamental nature of the
mistake between the contracting parties and the mutual nature, the given oral contract would
be considered void with no obligation for sale of car.
An offer has been made by Michael for the sale of truck and it has been communicated
through post on January 2. This offer has become valid on January 7 since the letter is
received by the intended offeree Dan. Dan accepted the offer and to communicate the same
sent the acceptance through post on the same day i.e. January 7. This action on part of Dan
led to contract being formed with Michael for the sale of truck. However, Michael telephoned
Dan to revoke the offer on January 8. But this would not impact the enforceability of contract
as offer cannot be revoked once acceptance has been given by the offeree. Thereby, the
contract between Dan and Michael for sale of truck is valid.
A unilateral mistake has occurred in the sale of truck by Dan since he intended to sell it to his
nephew. Also, Gordon (the buyer) has no responsibility as he is not aware of the mistake at
the first place. Further, to escape from selling the truck to Gordon, a possible defence strategy
available to Dan is ‘non est factum’. However, given the circumstances, it would not be
successful as the mistake in contract signing by Dan is the result of his negligence rather than
any disability or misunderstanding.
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The display of Holden Statesman with a price tag of $ 10,000 amounted to invitation to treat
in the given case as it is not known that it was on sale. As a result, Edgar’s interest to make
the purchase for a consideration of $ 10,000 amount of offer and not acceptance. To the offer
given by Edgar, no acceptance was given by Dan. He instead pointed the mistake in the price
and offered to sell the car for $ 15,000 which Edgar did not agree to. As a result, contract
formation has not happened in this scenario.
Conclusion
No enforceable contract between Mary and Dan has been formed on account of mutual
mistake in relation to car colour.
An enforceable contract between Michael and Dan has been formed before offer could be
revoked by Michael.
An enforceable contract between Gordon and Dan has been formed despite the mistake in
signing the contract by Dan.
No enforceable contract between Edgar and Dan has been formed on account of lack of
acceptance in this case since the initial display was invitation to treat only.
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References
Davenport, S. and Parker, D. (2014) Business and Law in Australia.2nd ed..Sydney:
LexisNexis Publications.
Edlin, D. (2015) Common law theory. 4th ed. Cambridge: University Press Cambridge.
Lindgren, K.E. (2015) Vermeesch and Lindgren's Business Law of Australia.12th ed.Sydney:
LexisNexis Publications.
Pendleton, W. and Vickery, N. (2016) Australian business law: principles and applications.
5th ed.Sydney :Pearson Publications.
Richard, S. (2015) The Modern Law of Contract. 5th ed. London: Cavendish.
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