Relevant Rule
The remarkable Australian case Taylor v Johnson (1983) 151 CLR 422 talks about the provisions of unilateral mistake in a contract. It can be said that Unilateral mistake occurs in a party to the contract is mistaken about some term of the contract while the other party is not mistaken. It can be sad that the common law governs the remedies for unilateral mistakes. However equity will also be involved in consideration of remedies for Unilateral Mistake. It can be said that the intervention of equity is essential to protect the rights of the mistaken party. For the intervention of equity, it is essential for the unmistaken party to exhibit some improper conduct such as to take advantage of the mistake.
In the aforementioned case, clear distinction was made between instances in which a contract could become void and instances in which contract would remain valid due to unilateral mistake. In this case there was a unilateral mistake of representation involved. Johnson, the defendant offered to sell a property of ten hectares to the defendant Taylor for $15000 dollars per hectare. However, due to a mistake of representation the plaintiff thought that the offer was $15000 for the entire plot of land. It can be noted that the plaintiff claimed specific performance. However, the defendant sough an order to make the contract void.
It can be stated that to assess the validity of the contract a subject theory was applied as stated in the case Smith v Hughes (1871) LR 6 QB 597. The subjective theory states that a contract would become void ab initio if one party to the contract has entered the contract under a serious mistake of the contract term and the other party has knowledge of the mistake.
In the case Svanosio v McNamara [1956] HCA 55; (1956) 96 CLR 186 it was held by the court that there is difficulty involved in assessment of a circumstance when equity could provide relief to the unmistaken party by setting aside the contract. In the aforementioned case Taylor v Johnson it was held that the Plaintiff was aware of the mistake and had deliberately tried to take advantage of the mistake in the contract. This action of the plaintiff was considered unconscionable. In this case the trial court had awarded specific performance. However the decision of the trial court was in the New South Wales. The High Court also rejected the subsequent appeal of the plaintiff.
In this case, a unilateral offer was given by Mojo Beverages in the form of an advertisement in a newspaper. The advertisement stated that $100,000 would be paid to anyone who catches a trout and releases it back. However, later a rumor spread that the award for catching the Trout was reduced to $1000. The rumor was true as the consideration of the offer was revised by Mojo Beverages. It can be mentioned that Ben had become aware of the change of consideration amount to catching the Trout by a fisherman. Therefore, after analyzing the facts of the case it can be stated that there was a unilateral mistake on the part of Mojo Beverages. However, Ben had become aware of the mistake in the offer but still he intended to take advantage of the mistake. The subjective theory, as stated earlier can be applied in this case. According to the subjective theory, a contract would be considered void ab initio if either of the parties to that contract has entered into the contract under a mistake of the contract terms and the other party is aware of such mistake. In this case, the unmistaken party had exhibited misconduct by claiming the original offer amount from Mojo Beverages in spite of being aware of the revised offer terms. Therefore, it can be stated that the intervention of equity is essential in this case to protect the rights of the mistaken party.
Application of Rule to Australian Case of Taylor v Johnson
Conclusion
Thus to conclude, it can be said that Ben is not rightful in claiming $100,000 from Mojo Beverages. Mojo Beverages is not liable to pay $100,000 to Ben. The contract formed between Ben and Mojo Beverages would be considered void ab initio.
- Was a contract formed between the parties?
- What are the rights of Livestock Brokers?
- What are the liabilities of Dorper Sheep Sellers?
The provisions of Contract are governed by common law in addition to the following legislative statutes.
- Competition and Consumer Act 2010 (Cth))
- Sale of Goods Act 1923 (NSW)
- Contracts Review Act 1980 (NSW)
- Civil Liability Act 2002, (NSW)
It can be stated that the first essential of a valid contract is offer and acceptance as held in the case Smith v Hughes [1871] LR 6 QB 597.
In the notable case Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256; [1892] EWCA it was held that an offer can be made to an individual and even to the entire world at large. It is to be noted that a contract is formed by an offer by the offeror and acceptance of such offer by the offeree. An offer should be distinguished from willingness to negotiate. An offer is a promise by the offeror willing to create legal relations with offeree provided that the terms of the offer are accepted. It is to be mentioned that the offer must be accepted precisely on the terms of the offer. The offeror has the power to revoke the offer any time before its acceptance by the offeree. However, it is to be mentioned that the information of revocation of the offer must be conveyed to the offeree either directly or indirectly. In the case, Hyde v Wrench (1840) 49 ER 132 it was held that once the offer has been rejected the same cannot be accepted again.
In the case Crown v Clarke (1927) 40 CLR 227 it was held that acceptance is a statement which is unequivocal in nature. The statement of acceptance of the offer is to be given by the offeree upon agreeing to the terms of the offer. The acceptance of offer can be done orally, in writing and by conduct. In the aforementioned case it was held that the acceptance of an offer can be done only by the person to whom the offer was made. In the case Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527 it was held by the court that no particular form is essential for acceptance. In the case Felthouse v Bindley (1862) 142 ER 1037 it was held that silence on the part of the offeree will constitute acceptance and impose the liability on the offeree to reject the offer.
In order to make the acceptance valid it must be communicated to the offeror as held in the case Bressan v Squires [1974] 2 NSWLR 460. The general rule is that an agreement will start to exist once the communication of the acceptance of the offer has been done. In the case Manchester Diocesan Council for Education v Commercial & General Investments Ltd[1970] 1 WLR 241; [1969] 3 All ER 1593 it was held that if a particular form or method of acceptance is mentioned in the offer, the acceptance of the offer must be made in that way.
In the aforementioned case study, an offer was made by Droper sheep sellers to Livestock Brokers. The offer contained specific details, which can be considered to be the terms of the offer. The offer also stated the price of the sheep, which can be considered to be the consideration of the contract intended to be formed. The offer clearly specified that for the contract to be formed, the news of acceptance of the offer must be communicated to the offeror within a period fourteen days. Livestock Brokers had replied to the offer by a letter enquiring the financial terms of Business. On receiving no reply from Droper Sheep sellers, Livestock Brokers communicated the news of acceptance of the original offer within the stipulated time period. Therefore it can be sad that a contract between the parties had been formed. Therefore, the decision of Droper sheep sellers to revoke the offer is not permissible. Droper Sheep sellers will be held liable for breach of contractual terms by the latter party. Livestock Brokers will be entitled to claim damages from the aforementioned party for the loss suffered by them due to the breach of contract terms.
Conclusion
Thus to conclude, it can be said that a contract was formed between the aforementioned parties. Livestock Brokers are entitled to claim damages from Droper Sheep seller for the loss suffered by them due to breach of contract terms. Dropers Sheep sellers are liable to pay damages to the latter party as the revocation of offer was not done prior to the acceptance of the offer.
Reference List:
Taylor v Johnson (1983) 151 CLR 422
Smith v Hughes (1871) LR 6 QB 597
Svanosio v McNamara [1956] HCA 55; (1956) 96 CLR 186
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256; [1892] EWCA
Hyde v Wrench (1840) 49 ER 132
Crown v Clarke (1927) 40 CLR 227
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527
Felthouse v Bindley (1862) 142 ER 1037
Bressan v Squires [1974] 2 NSWLR 460
Manchester Diocesan Council for Education v Commercial & General Investments Ltd[1970] 1 WLR 241; [1969] 3 All ER 1593
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