Business Law Case Study: Contract Law Issues for Dan's Business

This business law case study analyzes four distinct issues arising from Dan's second-hand car business. The first issue examines a potential mutual mistake in a car sale with Mary, determining whether she can rescind the agreement. The second issue concerns Michael's cancellation of an offer before the acceptance letter arrived, evaluating the applicability of the postal rule. The third issue addresses Dan's obligation to fulfill an agreement signed with Gordon, despite not reading it, considering the doctrine of estoppel. Finally, the case assesses Dan's liability to sell a car to Edgar for a specific price, focusing on the elements of offer and acceptance and the offeree's right to reject. The analysis employs the ILAC method, citing relevant legal principles and case law to arrive at conclusions for each issue.

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Table of Contents
Issue 1.........................................................................................................................................2
Issue 2.........................................................................................................................................2
Issue 3.........................................................................................................................................2
Issue 4.........................................................................................................................................2

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Issue 1
It is to be decided whether Mary should continue with the deal with Dan or whether
he should comply with Mary’s choice.
Law
The law requires evidence (express or implied) that the parties intended to make their
agreement legally binding. Without evidence, the law presumes that the parties intended to be
legally bound by commercial or business agreements. Their intention should be common and
their mind should meet as per the essentials of a valid contract. In case, their intention do not
match and they are unaware of it, it would be termed as mutual mistake, as both of them were
under the influence of mistake regarding the agreement, which gives them the discretion to
choose whether to continue with the agreement or rescind it.
Application
Mary approached Dan for buying a white 2002 Honda jazz. Dan agreed with Mary’s
offer, however did not check the specification of the particular car that Mary was asking for.
When Dan realised that Mary was asking for a different car he rejected her offer of selling the
white car. In this case Mary can either continue with her initial deal with Dan or she may
rescind the agreement. The mutual mistake between the two gives Dan the right to exercise
his discretion on selling the white car to Mary as per her choice or he may rescind the
agreement.
Conclusion
Therefore, Mary shall not be liable to continue with the deal with Dan. Bothe the
parties have the right to rescind the agreement for there was a mutual mistake between them.

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Issue 2
It is to be decided that whether Michael would have the obligation to buy the car,
although be cancelled the order before Dan's Letter of acceptance reached him
Law
A contractual agreement occurs when the offeror has communicated an offer to the offeree;
and the offeree has communicated acceptance to the offeror. Offers can be expressed in
writing or in words or can be implied from conduct. . In order for there to be a valid contract
the party to whom the offer has been made must accept the offer and that acceptance must be
communicated to (that is, reach the mind of) the offeror. Generally, acceptance can be
communicated by any means, irrespective of how the offer was communicated. An exception
to the rule relating to communication being effective when it reaches the mind of the offeror
is the postal acceptance rule, established in the case of Adams v Lindsell (1818) 106 ER 250.
Application
Here, Michael rescinded the offer that he made to Dan for buying a Toyota CX Truck
over phone. Dan in reply sent a letter of acceptance to Michael that confirmed his acceptance
of Michael’s offer. Before the Letter of acceptance could reach Michael, he called Dan over
telephone and cancelled the offer. As per the postal rule of communication, Michael, the
offeror could cancel the offer before Dan, offeree confirms the acceptance of the offer or
rather the letter of acceptance of the offeree reaches the offeror. Michael cancelled the offer
on 8th January which is before he got hold of Dan’s letter.
Conclusion
Therefore, Michael would not be obliged to buy the car.

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Issue 3
It is to be decided whether Dan is bound to comply with the agreement that he signed
with Gordon.
Law
Where a party to a contract promises to do something that they are already obliged to
do either at law or under another contract with the promisor, then they will not have given
anything in addition under the contract which will constitute consideration. The doctrine of
Estoppel was accepted into Australian law in Walton’s Stores Ltd v Maher (1988) 164 CLR
387 where it was ensured that a party that has promised something to another should not take
his word back. Such refusal would defeat the meaning of an agreement.
Application
Here, Dan signed the agreement paper without reading the fact that the agreement
involved the selling of the car that he was saving for his nephew. However, now that he has
signed the agreement, irrespective of the fact that whether he read it or not (in this case, his
salesperson read it), he has no way other than selling the truck to Gordon. He is supposed to
abide by the clauses of the agreement signed with Gordon.
Conclusion
Therefore, Dan is bound to comply with the agreement that he signed with Gordon.

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Issue 4
The issue is to decide whether Dan would be made liable to sell the car to Edgar for
$10,000.
Law
One of the essential elements of a valid contract is to offer something to someone,
who in return accepts the offer. A contractual agreement occurs when the offeror has
communicated an offer to the offeree; and the offeree has communicated acceptance to the
offeror. A contractual agreement occurs when the offeror has communicated an offer to the
offeree; and the offeree has communicated acceptance to the offeror. However, the offeree
has every right to reject the offer as soon as he is offered so, for any reason whatsoever. The
offeror cannot question the rejection of the offeree.
Application
Here, Edgar offered to buy a car for $10,000 to Dan, in context to which Dan readily
replied that the price of the car is higher and therefore, there will be no deal between them.
Dan made himself clear about the higher price of the car and hence he rejected the offer of
$10,000, written on the signboard stuck to the car. Once Dan has rejected the offer of Edgar,
he cannot be pushed or forced to carry on with the same agreement.
Conclusion
Therefore, Dan cannot be made liable to sell the car to Edgar for $10,000.

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Reference list
Adams v Lindsell (1818) 106 ER 250
Business and Corporations Law School of Accounting and Finance Faculty of Business,
Justice And Behavioural Studies
Walton’s Stores Ltd v Maher (1988) 164 CLR 387