Contract Law Questions And Answers

Question 1

1. The offeror can plead to discharge the contract based on mistake of fact as to the year of manufacture of the guitar. Mistake of Law makes a contract voidable on the option of the other party to the contract. In case, the offeree refuses to discharge the agreement, the offeror can sue him for misrepresentation pertaining to the manufacturing year of the guitar, which he should have been aware of as the owner of the goods.

2. John would have no legal ownership claim over the lawnmower, as it is a stolen one. John would not be able to establish his ownership stating the offer, acceptance and consideration factor to the authority as one of the other essential of contract says that an agreement cannot be based on illegal or stolen goods. John cannot claim ownership, however can claim a refund from Cheryl.

3. It would be advised to Janine that she cannot open the men’s clothing store for she sign an agreement with Yvonne under which she cannot deal in ‘any retail business’ within a radius of one mile for the next 5 years. Under contract law, such restrictive agreements are valid and enforceable. Its purpose is to reduce competition when a business is in its thriving stage.

4. Marion should wait until 4 pm and visit Jimmy’s residence accordingly to check for himself about the truth behind such rumors as Jimmy and Marion had an agreement to exchange the painting and the consideration amount at that particular place and time. Any action taken before the exhaustion of the scheduled time would amount to breach.

5. Sherwin’s father would be the plaintiff in this case and he could sue the seller fort breach of contract as he made the seller aware of the purpose of his purchase and the goods did not turn out to be fit for such purpose. He could sue the seller for damages.

6. John has the eligibility to claim damages under the defense of ‘Caveat Venditor’, that is ‘let the seller beware’ that says a seller should be careful while  selling a product and must convey the pros, cons and specification of the terms of sale to the buyer. Therefore, John can sue Bad Billy stating that the seller failed to mention any such thing to him at the time of purchase, thus liable to be prosecuted. Moreover, John can claim for protection under the Consumer Law as well.

7. Carson was not contend with the agreement from the beginning, as he was not satisfied on the deal regarding the company’s specialized computer program and equipment. The consideration offered on these items were not sufficient as per Carson’s accountant and it would be a loss for the company to enter into such contract. Therefore, Carson has the defense of ‘Mistake’ to avoid the contract. He can move the court by praying to dissolve the agreement under unilateral mistake of entering into the contract pertaining to the insufficient consideration amount. On the contrary, he can opt for a discharge of the contract by agreement with Sarsfield stating the issues that his company might face if the contract is performed.

8. Under the law of contract, Consideration may not be ‘adequate’ to form a contract. In Chappel v Nestle, it was held that consideration is referred to a detriment of value caused to the promisor who receives something in exchange of such detriment from the promisee. Therefore, in this case, it can be held that the promisor had offered $2500 to the promisee in exchange of her guitar, which she readily agreed to. The promisee cannot refuse to perform the contract later on the basis of ‘inadequate consideration’.

9. Jimmy would be not be able to prove his ground by stating that he had no intention to enter into the contract. It was very clear from his actions of accepting the consideration amount that he had intention to form an agreement. Although ‘intention’ is an independent factor that needs to be proved by parties, however the presence or exchange of consideration is the strongest evidence of intention of both the parties to the agreement.

Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256.

Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87.

Richard v. Time Inc., (2012) SCC 8.

Wood v Scarth (1858) 1 F&F 293.