Does any contract exist between the parties? Can Jack held Mary Liable?
Mutual mistake is one of the important concepts of Contract law. It is a situation where both the parties of a transaction misunderstand each other regarding the identity of subject matter or any other fact. Raffles v Wichelhaus (1864) 2 Hurl & C 906 is a significant case where it has been given that in cases of mutual mistakes of parties, courts are required to apply an objective test (Stone, 2009). This test says that a contract will be held void if a reasonable person after looking facts and circumstances of the transactions cannot be sure about the identity of subject matter.
Here, Mary and Jack were talking about different cars. In the opinion of Jack, Mary was ready to buy Honda Jazz of red color whereas in actual, Mary got ready to purchase Honda jazz of white color. This is a case of mutual mistake. Applying the provisions of Raffles v Wichelhaus, an objective test is required to check. A reasonable person cannot decide that whether the dealing was about a red car or white car and hence objective test will not be helpful.
Conclusion (a)
The contract developed between Jack and Mary will be held void as it was a case of mutual mistake and parties were not aware of the intention of each other. In addition to this, a reasonable person cannot say with certainty about which car the transaction was about.
Did Michael and Dan enter into a valid contract? Can Dan sue Michael for breach of contract?
In general, offer and acceptance treated as complete when the same come into notice of respective parties i.e. offeree and offeror. However, there is an exception of this rule, which is known as postal acceptance rule. Where parties of the case use postal mode of communication, postal rules are applicable in such a situation. It was held in the case of Adams v Lindsell (1818) 106 ER 250 that whenever postal rules are applicable, acceptance is treated effective when offeree takes place the same into the mailbox (Furmston & Tolhurst, 2010).
In the provided case, Michael made an offer to Dan in reply to the advertisement placed by Dan in the newspaper. Michael posted this offer letter as on 02nd January and asked for the acceptance of Dan. Dan received this offer letter on 05th January. This is the date when the offer has been effective. In reply to this offer, Dan placed his acceptance by signing the same on 07th January. Applying the decision of the case of Adams v Lindsell and postal acceptance rules, this will be treated as the date when acceptance has been effective. Later on 8th January, Michael informed his confusion to Dan. Michael received acceptance made by Dan on 10th January.
Conclusion (b)
As acceptance been effective on 07th January, a contract was developed between Dan and Michael on the same day. Later on, Michael cannot cancel the contract and Dan has all the legal contractual rights against him.
Is the contract developed between Dan and Gordon is a legal contract? What is the liability of Dan?
A contract, which is signed by the parties, are assumed to be valid and binding one. Sometimes people after signing the contract think that they are not ready to perform the promises stated under the same as they have signed the contract under special circumstances. The argument is very difficult to prove and knows as “non est factum” (Lexology.com, 2016). To prove that the contract was signed by mistake, the claimant has to prove that the contract, which has been signed, was completely different from their presumption, the same has been signed under a disability, and they could not understand the document even if they would have read the same.
In the case presented hereby, Dan was the person who signed the contract. He was in a hurry and did not check and read the respective contract in which the second party was Gordon. It was his mistake. Now he wants to take a defense of non est factum. Here this is to state that the agreement was not of a completely different nature. Further, Dan was suffering from no disability at the time of signing the contract. At last, he did not read the contract but if would have read, he could understand all the terms and conditions clearly.
Conclusion (c)
The defense of non est factum is not available to Dan and the contract developed between him and Gordon is a legally binding contract. Dan is liable to give the delivery of truck to Gordon.
What is the contractual position of Dan and Edgar?
Under contract law, there are two terms, which are confusing in mutual. These terms are an offer and invitation to treat. This is to mention that an invitation to treat is simply a call for offers and one may not accept the same as it is different from an offer (Taylor & Taylor, 2007). Many of the times sellers put the label of wrong prices on goods. If the displayed goods would be treated as offer then there are chances that customers can accept them on wrong prices just by picking them up. To save the interest of the seller in such cases, common law provides that displayed goods with price tags will be considered as an invitation to treat and not an offer. This rule further supported in the decision given of the case of Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401.
In the given case, Edgar visited car lot and chosen a 2009 Holden Statesman on which a sticker of ‘$ 10 000 was placed. He went to Dan and stated that he is giving acceptance to buy the subjective car. Dan realized that the price mentioned in sticker was not correct and he denied to accept the offer by Edgar. Edgar, considering his statement as acceptance want to get the car. Here to say that Edgar was first required to make the offer and he cannot give his acceptance as no offer was there. Car available in a car lot with price tags was merely an invitation to treat and therefore Edgar was required to make the offer first in order to purchase the same and thereafter Dan was required to accept the same.
Conclusion (d)
Statement of Edgar was an offer and not the appetence. Since Dan did not give consent to the offer made by Edgar, no contract was there between two of them.
References
Adams v Lindsell (1818) 106 ER 250
Furmston, M. & Tolhurst, G., J. (2010). Contract Formation: Law and Practice. US: OUP Oxford.
Lexology.com. (2016) Non est factum — not reading is no excuse. Retrieved From: https://www.lexology.com/library/detail.aspx?g=577d9718-7381-47cc-b357-c1b8cd51a7fb
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401.
Raffles v Wichelhaus (1864) 2 Hurl & C 906
Stone, R. (2009). Q&A Contract Law 2009-2010. Oxon: Routledge.
Taylor, R., & Taylor, D. (2007). Contract Law Directions. UK: Oxford University Press.
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