Offer And Acceptance In Modern Contract Law

Unilateral Mistake in a Contract

Discuss about the Offer and Acceptance in Modern Contract Law.

This kind of mistake in a contract occurs when there is a mistake on the part of one party in relation to the terms of the offer or contract. This is the most common kind of mistake faced by parties with respect to a contract. While determining unilateral mistakes the distinction between business error and mechanical calculations has to be considered. In case there is a mechanical calculation error the part to the contact may rescind it but only in the case if the other party knowing the existence of such mistake tries to snatch up the offer and take advantage of the mistake. This may involve a bargain which a party had no intention to make and was suffering through an arithmetical error. The court in this case may hold the contract valid if the mistake appears reasonable to the other party and he did not make an attempt to take advantage of it or snatch the offer.  The concept of unilateral mistake was provided in the case of Lewis v Averay, [1972] 1 QB 198.

In order to create a legally binding agreement between the parties there must be an  offer followed by an acceptance and these must be supported by consideration and intention.  In the case of Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 52 the court ruled that an offer is a statements made by an offeror whit the intention of legally binding the person to whom such offer is made to the terms of the offer. The offer has to be complete and must have an intention to bind the other party to it.

 An acceptance has to be a mirror image of the offer, it cannot be a partial acceptance. The offeree must agree to all terms of the offer without making any additional terms to it in order to constitute a valid acceptance. In the case of Tonitto v Bassal (1992) 28 NSWLR 564 it was ruled by the court that an acceptance has to be corresponding to the terms of the offer.

In the case of Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20 the court ruled that the agreement in order to be legally binding has to be supported with a lawful consideration. Consideration necessarily not has to be adequate but it must be reasonable.

Offer

In the case of  Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 the court ruled that parties to the contract must have an intention to bind each other to the contractual terms and must agree to the same thing in the same sense.

In this case if the rules of unilateral mistake are applied to the first condition it can be held that the contract between the local game store and Saber does not exist or is void.

This can be asserted because it was evident in this case that the the $6.99 printed on the price tag of the game was a mere arithmetical mistake on the part of the game store. In addition Saber had the knowledge that such game was available in the market at a retail price of $69.9 in the market. Saber knowing such fact tried to take advantage of the mistake by the local game store by trying to snatch up the offer and therefore with the application of the rules relating to unilateral mistake in contract it can be determined that the contract between them was void.

In the second case, there was a valid offer made by Saber with the intention of binding the local game store to a contract in which he offered to pay a price of $53 to the game store. The attendant of the game store had agreed to such offer without any additional terms and conditions and therefore it accounted to a valid acceptance. In this case there was a reasonable consideration which was the game of Saber and $53 for the local game store. Therefore in the second case it can be determined that there was a valid contract between Saber and the Game store and Therefore Saber was entitled to get the game at a price of $53.

In this case it can be held that there was no valid contract in the first case as the arithmetical error with respect to the price tag accounted to unilateral mistake. In the second case there was a valid offer acceptance , consideration along with the element of intention which led to the formation of a contract.

The issue in this case is to determine that whether Saber can claim compensation against loss suffered by him with respect to his care due to the actions of the parking lot in the first part and due to his own negligence in the second part.

Acceptance

A party to the contract can keep an exclusion clause in a contract which would dispose of any liability which the party would be entitled to bear on the happening of an event. However such clauses cannot be incorporated into a contract to dispose of a legal obligation which is owned by the party towards the other party to the contra. In the case of Curtis v Chemical Cleaning Co [1951] 1 KB 805 the question before the court was to determine that whether the exclusion clause added by the defendant was valid or not.  In this case the plaintiff had given her dress for cleaning to a laundry; the invoice stated that the laundry was not liable to any loss whatsoever caused to the dress. In this case the court ruled that such exclusion clause is not valid as the party cannot dispose of its legal obligation through a exclusion clause and subsequently held the claim of the plaintiff valid.

In the case of Parker v South Eastern Railway (1877) 2 CPD 416, the court ruled that the person is not liable to the exclusion clause which is printed on the back of the thicket if he is not aware of the existence of such a clause and no measures have been taken by the defendant to ensure that the person is made aware of such exclusions clause.

In the case of The Moorcock (1889) 14 PD 64 the court provided the requirements of implied terms in a contract. In this case the court provided the business efficiency test and ruled that implied terms are only deemed to be incorporated into a contract when they are necessary and obvious. 

In the case of Daniel v Anderson (1995) 16 ACSR 607, the court held that even if there was a fault on the part of the defendant which lead to the cause of injury to the plaintiff, the plaintiff could have avoided such loss or injury if he was not negligent himself.

Saber had parked his car in the parceling lot and received a ticket which indicated the allocation of parking space along with the time and date such parking was to expire. There was no expressed provision on the front of the ticket which would suggest that the parking lot had intended Saber to view the terms and condition which were printed on the back of the ticket.  Although a person signing a contract is liable to be bound to its terms and conditions in this case applying the provisions of the case Parker v South Eastern Railway (1877) 2 CPD 416 it can be determined that Saber is not libel to the exclusion clause as he was not instructed to read it.

Consideration

Moreover the law prohibits a party to add any exclusion clause into a contract which would dispose of a legal liability of the party towards the other party of the contract. In this case it is evident that the parking lot has a duty of care towards saber with respect to the car parked by him. This duty of care arises from the implied terms of the contract which exists between them as it is necessary and obvious for the parking lot to take care of the cars parked in it. This can be asserted by applying the principles of the case of The Moorcock (1889) 14 PD 64.

The duty of care in this case had been breached by the parking lot as they have failed to take reasonable care towards the car and it has subsequently caused damage to the car. They are liable to the damage caused to the car and saber would have a successful claim against them.

However the action of Saber in this case accounted to contributory negligence as he left the keys of the car inside which resulted in the theft of the car. Therefore in this case the parking lot cannot be held liable towards the theft of the car occurring from the negligence of Saber.

In the second case, if saber would not have left the keys of the car inside than it would not have resulted in any contribution towards the theft of the car. Therefore the parking lot would have been liable to compensate him for the car theft as it is their duty to protect the care while it is parked within their premises.

In the first case the parking lot is only liable for the damages caused to the care and nit the theft as sober himself contributed towards it. In the second case the parking lot would be liable for both the damages and the theft as they had a duty of care towards the protection of the car.

Tort of negligence is caused when a person directly or indirectly is harmed because of a negligent act or omission by another. The concept related to the tort of negligence was first provided by the case of Donoghue v. Stevenso. The concept provided  by this case was used first in Australia by the case of Grant v Australian Knitting Mills LTD’ [1936] AC 85. The court in this case provides four essentials which have to be considered in order to constitute the tort of negligence[18]. The elements provided by the court are a duty of care, breach with respect to such duty of care, causation of the damage and remoteness of the damage caused. In the case of Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40 (1 May 1980) the court ruled that a person must have a duty of care toward the other person who has been harmed and the duty of care which the person owed to another has to be breached through a negligent act or omission. The negligent act or omission has to be the cause of the damage suffered by the person this  concept was provided in the case of  Tubemakers of Australia Ltd v Fernandez (1976) 10 ALR 303. This essential of causation is assessed by the application of the “but for” test as used in the case of Adeels Palace Pty Ltd v Bou Najem [2009] HCA 48. In order to analyze that the actual cause of injury was the negligence by the defendant or not it has to be checked that the damage would have been caused or not if there was no negligence on the part of the plaintiff. The concept of remoteness was discussed broadly in Australia in the case of Jaensch v. Coffey (1984) 155 CLR 578. The court in this case upheld the claim of a plaintiff who suffered mental injury resulting from the aftershock of an accident even when she was not present at the spot.

Intention

In the case of Astley v Austrust Ltd the court ruled that if a person does a negligent act which aided the harm caused to him due to the negligent act or omission by another person it would account to contributory negligence. If the concept of contributory negligence is present in the case they court decides the damagers to be pained taking into account the degree of contribution towards the accident made by the plaintiff himself.

In this part of the paper the rules relating to negligence and contributory negligence are applied to the facts of the given case to come to a conclusion.

The most relevant fact to be considered in this case is that although Saber was in a hurry he drove within the specified speed limits en route to the hospital. Saber was struck by a car while he was taking a left turn. In order to constitute the tort of negligence it has to be proved that the driver had a duty of care towards Saber which in this case is evident as a driven owns a duty of care towards the pedestrians and other cars. The driver had breach the duty of care by causing an accident to Saber. It can be analyzed in this case by the application of the “but for” test that if the negligent act on the part of the driver was not present the accident would not have caused and Saber would not have faced the injuries due to which he missed his trip to the harbor.

Although in this case it can be noted that Saber would have been liable for contributory negligence as he failed to signal when he was turning left. It was quite evident by the police reports that although he had failed to provide the signal to the other driver the accident was not his fault. Therefore the concept of contributory negligence would not affect the outcome of his case.

Through the concept of remoteness it can be analyzed that it would not be difficult for a reasonable man to foresee that the harm caused due to the driver’s negligence might result in the loss faced by Saber with respect to this visit to the Sydney harbor due the harm caused to him by the accident.

Thus, it can be concluded in this part of the paper that although Saber had failed to signal the accident was not his fault and the other driver is liable to compensate him with respect to both his physical injuries as well as his missed trip.

Application of Unilateral Mistake to Case

I have done extensive research for the purpose of finding correct answers along with evidence for the answers provided by me.  While doing this research I came across many cases with respect to negligence, types of mistake in contracts, formation of contract and exclusion clauses with respect to a liability. I had the theoretical knowledge about the existing laws but through this assignment i got to know that I did not have practical knowledge about how laws are applied and interpreted by the courts in different situations. Through this assignment I gained experience in understand that how to use legal online databases to get precedent about the case I am suppose to address.  In this part of the assignment I would like to share the knowledge I have gained through this research with respect to various aspects of laws.

In case of contract formation I got to know what the rights and liabilities are of a contractual party who wishes to incorporate a exclusion clause into a contract. While doing this research I came across the case of L’Estrange v Graucob [1934] 2 KB 394 which made me aware that a party is liable to the terms and conditions of a contract if they have signed it without reading it. The court in this case had provided an extra condition which stated that such terms and condition should not have the element of fraud and misrepresentation in order to be binding on the party.

I also came across the case of Rutter v. Palmer where the court ruled that a person cannot dispose of his legal liability with respect the actions of his employees if adequate words in relation to such disposal have not been provided.  This rule according to me is not just on the other party who will be deemed to make an acceptance. I would recommend that the party including such terms in a contract must ensure that such terms are legible and visible to the other party I order for them to be enforceable.

I also came across the rule of contra proferentem in the case of Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500[20]. According to this rule if a vague or ambiguous clause is present in a contract than the clause must be interpreted agent the party who opted for the inclusion of such a clause into the contract.  This rule acts a guide for courts towards the interpretation of the terms relating to a contract.  According to me this rule could be unfair in case the party opting for the inclusion of such terms do not known this rule and subsequently suffer unwanted loss.

Exclusion Clauses in Contracts

Through the case of Gordon v Macgregor (1909) 8 CLR 316[21] I also came across the Parole evidence rule according to which when a oral contract is converted into a written contract the terms of the oral contract which are not included in the written contract are deemed to be discarded by the court. 

When I was searching for negligence related cases in Australia I came across a lot of medical negligent cases which though not relevant towards my topic provided me handy knowledge about the issue within the country. I also came across the various rules which have to be applied in order to determine the existence of a tort of negligence[22]. These test included the Caparo test to determine personal injury, Alcock test to determine any mental injury, the “but for” test to determine causation and how to determine remoteness with respect to the harm caused by a negligent act.

My knowledge about the formation of contract also increased through this research as I came to know various methods of determining the intention of a person towards the contract. I also came to know that objective intention is not necessary to determine the intention of an offeror. Intention of an offerer is determined by checking that whether a reasonable person would be induced into a contract based on the expression of the offeror.

Overall, this assignment helped me to gain adequate knowledge about how to use online rescores and legal data bases to solve the cases provided to me. I also came to know how to use legal databases like Austlii to find cases relevant to my problems.

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