This document provides legal advice for various contractual mistakes in different scenarios. It discusses mutual mistakes in the sale of Honda Jazz, termination of offers, unilateral mistakes, and misprinted price stickers on cars. The document explains the relevant laws and provides application and conclusion for each scenario.
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Issue The objective is to ascertain legal advice to Dan for the given scenarios as highlighted below. Have Dan and Mary entered into contract for the sale of Honda Jazz irrespective of their mutual mistake regarding colour of Honda Jazz? Have Dan and Michael entered into a contract irrespective of the fact that Michael has terminated the offer? Have Dan and Gordon entered into a contract irrespective of Dan’s unilateral mistake regarding signing of the contract? Have Dan and Edgar entered into a contract for Holden Statesman despite that Dan’s worker wrongly misprinted the price sticker on the car? Law Mistakes do happen when people are entering into contractual relations. One type of mistake is mutual mistake which refers to a scenario where mistake has happened on part of both buyer and seller. Typically, this arises in the context of the object for sale which on account of insufficient description may lead to mistake. Contracts enacted based on mutual mistake and that too regarding fundamental aspects such as object of sale would lead to contract being declared void in line with the judgement inRaffles v Wichelhaus(1864) 2 Hurl & C 906 case (Taylor and Taylor, 2015, p. 132). The postal rule highlights the offer and acceptance related rules that are applicable when the selected mode of communication is through post. The offer becomes valid only after the letter indicating the same has been received by the offeree. Any delay in the receipt of offer letter would lead to delay in offer being communicated. However, acceptance on part of offeree becomes valid immediately when the letter indicating consent for the offer is posted irrespective of the time taken to reach the offeror. This has been exhibited in the judgement given inAdams v Lindsell(1818) 106 ER 250 case ( Lindgren, 2014, p. 105). In certain situations only one contracting party is mistaken leading to a unilateral mistake. In such scenario, it is expected that the other party should rectify the mistaken party provided the other party knows about the mistake. This is as per the judgement given inCundy v. Lindsay(1878) 3 App. Cas. 459 case (Andrews, 2014, p. 145). A particular situation requiring special rules is when a written document is signed by mistake by one of the parties. 1
To escape contractual liabilities, defence named “non-est factum” is available. However, in order to obtain relief, the mistaken party needs to establish that the signed contract was significantly at odds with the assumed contract, the document could not be understood and the mistaken party suffered from a disability. This defence would not provide relief on account of negligent conduct as it is assumed that a signed document would have been read before signing (Carter, 2016, p. 131). It is imperative to distinguish between offer and invitation to treat as acceptance in the former leads to contract formation which is not the case for the latter. In the context of displayed goods with price, invitation to treat would be applicable unless the phrase “on sale” is included along with price. As a result, the interest buyer can make offer for the concerned object which would lead to a binding contract only if it is accepted by the seller. This is in accordance with the judgement pronounced inPharmaceutical Society of Great Britain v. Boots Cash Chemists[1953] 1 QB 401 case (Gibson and Fraser, 2014, p. 90). Application Mary offers to buy white Honda Jazz from Dan and hence, she has made an offer to Dan along with a consideration of $14,000. Dan has unconditionally accepted the offer assuming that the offered price is for red Honda Jazz. It is evident that both the parties have not discussed about the colour which indicates that both the parties are mistaken resulting in the mutual mistake. Therefore, the contract will be declared void and contractual liabilities will not be imposed on them. On January 2, Michael has posted an offer letter containing the information about purchase of the truck from Dan for $14,000 consideration. The letter reaches to Dan on January 7 and becomes enforceable. Same day only, Dan signs the letter and put into the post box. At this moment, the acceptance becomes enforceable on Michael and a valid contract is formed between them. Furthermore, on January 8, Michael telephones him regarding termination of the offer which is not valid here because the offer has already been accepted. Hence, Michael has to perform the contractual duties as indicated in the contract. Dan did not want to sell a particular truck to any other party bersides his nephew. However, he did not read the contract papers and signed the contract of sale for this particular truck. Gordon is the other party who does not know about Dan’s mistake. Therefore, the contract will be enacted between them despite the unilateral mistake of Dan. Further, the conditions required for the validation of “Non- est factum” defence are not fulfilled here as Dan has 2
signed the contract in his negligence and thus, no relief would be available to him in regards to escape the contractual duties. One of the workers of Dan has put a wrong price sticker on 2014 Holden Stateman. Edgar though that the car iwas available for this consideration and hence, conveyed his acceptance to Dan. Later on, Dan realized the mistake of worker and refused to sell the car for the printed price. It can be said that Edgar’s acceptance would not be considered as valid because there was no offer from Dan. The display of the price sticker on car amounts to only invitation to treat. Further, the offer of Edgar was discarded by Dan. Also, Dan has offered Edgar to sell the 2014 Holden Stateman for $15,000 which is not accepted by Edgar and hence, no contract is enacted between them. Conclusion Mary and Dan have made mutual mistake regarding the car colour and hence, contract will be considered as void. A contract will be enforceable on Michael and Dan because Dan has communicated his valid acceptance before the termination of the offer. Gordon and Dan will have to fulfil the contractual liabilities as Dan has made unilateral mistake of signing the contract due to negligence. Edgar and Dan will not be bound into contractual relation because the sticker saying $10,000 was invitation to treat not an offer. 3
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References Andrews, N. (2014).Contract Law, 3rded. Cambridge: Cambridge University Press. Carter, J. (2016).Contract Act in Australia,3rded. Sydney: LexisNexis Publications. Gibson, A. and Fraser, D. (2014).Business Law,8thed. Sydney: Pearson Publications. Lindgren, K.E. (2014).Vermeesch and Lindgren's Business Law of Australia,12thed.Sydney: LexisNexis Publications Taylor, R. and Taylor, D. (2015).Contract Law,5thed. London: Oxford University Press. 4