Topic: MISTAKE

The facts are presented in the scenario. 

The legal issues are as follows:

(1) Whether initial contract Re: Roger and Michelle was a mistake or misrepresentation.

(2) Whether valid contract Re: Michelle and Adrian existed.

(3) Whether valid contract continued to exist Re: Roger and Michelle after returned check.

(4) Whether satisfactory remedy exist for Roger.

The first issue to be considered is whether initial contracts Re: Roger and Michelle was a mistake or misrepresentation.

It is important, at this time, to discuss what mistake and misrepresentation is. Mistake is described in the strict legal sense as occurring in two instances, mistakes about the terms related a contract and mistakes as to assumptions about important facts related to a contract. This is not to be confused with simple mistake where individual interpretation leads to personal disadvantage; the courts do not recognize the error in judgment as justification for avoiding obligation under a contract. Misrepresentation is a statement of fact made by one party to another, which while not forming a term of the agreement induces the person to whom it is made, to enter into the contract. A misrepresentation is a representation, which is untrue. In the above scenario neither mistake nor misrepresentation can be considered, it is a clear offer and acceptance with consideration being tendered by both parties who intended legal relations on the sale and purchase of the vehicle.

The second issue is whether valid contract Re: Michelle and Adrian existed.

It is important in Phillips v. Brooks (1919), where a man name North entered the shop of the plaintiff to purchase pearls and rings. He offered to pay by check and represented himself as Sir George Bullough and gave his address. This was verified and he was allowed the purchase. North sold the jewellery to the defendant. The bank returned the check after the sale to the defendant. The plaintiff promptly sued the defendant in an attempt to recover the loss. Held where a contract is void due to fraud and the goods passes before the contract is void the innocent party gets a good title to the goods. In the above scenario Adrian is the innocent party purchasing the goods in good faith, the purchase was made before the fraud was detected and hence good title had passed.

The third issue to be considered is whether valid contract continued to exist Re: Roger and Michelle after returned check.