Legal Analysis of Contractual Issues: Dan's Car Business - Semester 1

This assignment provides a legal analysis of several contractual issues faced by Dan, the owner of a second-hand car business. The analysis, structured using the ILAC method (Issue, Law, Application, Conclusion), addresses four key scenarios. The first involves a potential contract with Mary, explo...Read More

Issue
There are four issues in the present case which need to be resolved through legal advice.
Issue 1: Whether Mary and Dan enacted a enforceable contract considering their mutual
mistake regarding the colour of 2002 Honda Jazz.
Issue 2: Whether Michael and Dan have entered into a contractual relation considering that
Michael has revoked the offer and do not want to purchase the truck from him.
Issue 3: Whether Gordon and Dan have formed a legal contract irrespective of the fact that
Dan did not want to sell the truck and mistakenly sign the document of contract.
Issue 4: Whether Edgar and Dan are bound into contract even if Dan does not want to sell the
2014 Holden Statesman for $10,000.
Law
In some instances, contracting parties also make some mistakes while enacting the contract.
These mistakes can be common, mutual or unilateral. As the name suggests, mutual mistakes
are those which have been done by both offeror and offeree. It generally incurs from the
contractual objects as offeror and offeree are taking about two different things and enact the
contract with their own assumptions rather than clarifying from each other. In such cases, the
contract would be void and parties are not liable for any contractual duties as witnessed in
Raffles v Wichelhaus(1864) 2 Hurl & C 906 case (Carter, 2016, p. 141).
In accordance with the postal rule, offer is considered to be enforceable when it has reached
to the offeree whereas acceptance will be enforceable when the offeree posts the acceptance
letter to offeror. The data on which the acceptance letter is actually received by the offeror is
immaterial. Further, the offeror cannot revoke/cancel the offer once it has been accepted on
behalf of the offeree. This understanding is highlighted in the verdict of Adams v Lindsell
(1818) 106 ER 250 case (Andrews, 2014, p. 98).
Unilateral mistake is the one which is made by only one party. It is responsibility of the other
party to bring the notice of the other mistaken party about the incurred mistake, if the party is
well aware about the mistake. This factual information has been derived from the verdict of
Cundy v. Lindsay (1878) 3 App. Cas. 459 case (Lindgren, 2014, p. 175). One of the common
unilateral mistakes made by the party relates to mistakenly sign an unintended written
contract. In this regards, the non-est factum defence is taken into consideration to provide
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relief to the mistaken party. However, this is only applicable for the three cases where the
concerned person has disability, problem in understanding of the contract and signs a
document which deviates significantly from expected. Signing of the contract due to
negligence does not provide any relief to the mistaken party and contract would be
enforceable (Taylor and Taylor, 2015, p. 118).
Acceptance towards invitation to treat does not validate contract formation. In this regard, it
is noteworthy that any advertisement with price tag only which does not include information
related to the sale is not considered as offer to sale and rather just an invitation to treat. The
seller has legal rights to either accept or reject the offer of the buyer .In the Pharmaceutical
Society of Great Britain v. Boots Cash Chemists [1953] 1 QB 401 case, the display of the
medicine price without inclusion for sale in their advertisement was considered as invitation
to treat and not offer (Gibson and Fraser, 2014, p. 78).
Application
Mary (offeror) has offered Dan (offeree) tobuy white 2002 Honda Jazz for $14,000 which
was available for sale. Dan has agreed to accept the offer considering Red 2002 Honda Jazz.
It is essential to note that neither Mary nor Dan has specified the colour of 2002 Honda Jazz.
It represents that Dan and Mary both have made mutual mistake by not specifying the colour
of car. As a result, the contract enacted would become void and no contractual liabilities are
applicable on Dan and Mary.
Michael has offered Danto acquire a truck for a consideration price of $18,000 on January 2.
This offer letter has reached to Dan on January 5 and become enforceable for contract
formation. Further, Dan has accepted the offer without any condition and signed the
contractual document and sent the letter back to Michael on January 7. It is noteworthy that
Dan has used postal media to communicate his acceptance towards the offer. Due to this, the
acceptance has become enforceable and a valid contract has been formed between them on
January 7. Further, Michael revokes the offer and informs Dan on January 8 after the
acceptance of the offer by Dan. Hence, the revocation of offer is not possible and both the
parties have to fulfil contractual duties.
It is evident that Dan has not read the document of the contract and has signed the contract
which includes the sale of a truck to Gordon which actually he does not want to sell to
anyone other than his nephew. Also, Gordon does not know about this fact that Dan has not
read the document and just signed the contract. Hence, it can be said that unilateral mistake
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has been made on the part of Dan which is due to his negligent behaviour and thus, ‘non est
factum’ does not provide any relief to Dan and he has to complete the contractual duties.
Edgar has noticed the sticker contains price $10,000 on the windshield of Holden Statesman
and then he has walked into Dan’s office and stated his acceptance to purchase car for
$10,000. It can be said that mere price does not represent any other information which shows
that it is available for sale for $10,000 and hence, it is an invitation to treat. Dan rejects the
offer of Edgar and also, made a counter offer of selling the car for $15,000. Edgar rejects the
offer of Dan and hence, no contract is formed between Edgar and Dan.
Conclusion
Due to mutual mistake, the contract will be categorised as void and no contract liabilities are
applicable for Mary and Dan.
Michael and Dan have entered into a legal contract and have to fulfill the contractual
liabilities.
Gordon and Dan have entered into contractual relationship because Dan has not read the
contract and negligently signed the contract.
No contract is formed between Edgar and Dan as the display on windshield is representing an
invitation to treat instead of offer.
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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, 12th ed. Sydney:
LexisNexis Publications
Taylor, R. and Taylor, D. (2015). Contract Law, 5th ed. London: Oxford University Press.
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