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AnswersCategory: Contract LawContract Law – Unilateral Mistake
Peter Fawler asked 11 months ago

A, a builder, asks Lothian Quality Building Suppliers, a firm that sells building materials, to give him a quotation in respect of certain quantities of materials that he needs for a building project. B, an employee of the firm, does the necessary calculations and writes alongside each item on A’s order form the cost of the item in question. He neglects, however, to add up the total sum in respect of all the various items ordered; this is done by C, a partner of the firm, who makes an arithmetical error and fills in the incorrect amount in the space left for the ‘total contract price’. A receives the quotation, notices that it is significantly lower than that of the other dealers, and accepts the terms of Lothian Quality Building Suppliers. The next day before the order is executed, the error is discovered. Lothian Quality Building Suppliers refuse to deliver at the quoted price and insist upon rectification of the contract. A wants to know whether he can insist on delivery at the advantageous contract price.

Advise A.

1 Answers
Sense Academics Staff answered 11 months ago

Hello Fawler. My name is Alex and i am a legal freelance writer here at Sense Academics. Please find below the best p[ossible way to advise A. If you like my answer and have a legal paper that you may wan’t written, you can request me on your order and i will personally be assigned to write the paper for you.

UNILATERAL MISTAKE: UNFAIR ADVANTAGE BY THE OTHER PARTY

FACTS

A, a builder, asks Lothian Quality Building Suppliers, a firm that sellsbuilding materials, to give him a quotation in respect of certainquantities of materials that he needs for a building project. B, anemployee of the firm, does the necessary calculations and writes alongsideeach item on A’s order form the cost of the item in question. He neglects,however, to add up the total sum in respect of all the various itemsordered; this is done by C, a partner of the firm, who makes anarithmetical error and fills in the incorrect amount in the space left forthe ‘total contract price’. A receives the quotation, notices that it issignificantly lower than that of the other dealers, and accepts the termsof Lothian Quality Building Suppliers. The next day before the order isexecuted, the error is discovered. Lothian Quality Building Suppliersrefuse to deliver at the quoted price and insist upon rectification of thecontract. A wants to know whether he can insist on delivery at the advantageous contract price

PARTY A WANTS WANTS TO KNOW WHETHER HE CAN INSIST ON DELIVERY AT THE ADVANTAGEOUS CONTRACT PRICE.

  1. THE ISSUE:Unilateral Mistake – Unfair Advantage by the Other Party.
  2. THE LAW:
  3. Generally, in the case of a unilateral mistake“error known to and taken advantage of,” the contract can be renderedvoid ab initioor merely voidable (no such contract ever existed) if the situation is one where the other party, A, not only knew of the mistake made by the other party, Lothian Quality Building Suppliers, but also took unfair advantage of it.
  4. Unfair advantage is with no doubt enough reason, all else being equal, to take reasonable precautions against the risks of foreseeable transactional harm to Lothian Quality Building Suppliers, when A was, unknowingly to Lothian Quality Building Suppliers at the time, entered into a contract that created a vacuum for ‘exploitation’.

The law in this situation is informed by the case of Steuart’s Trustees v Hart (1875) 3R 192 and Angus v Bryden 1992 SLT 884.

  1. In cases of unilateral mistake as to “error known to and taken advantage of,” from the line of authority by Steuart’s v Hartline, and to the vitiating elements arising from conduct in pre-contractual dealings makes the contract voidable,that is, rescindable (or cancellable) at the option of the Lothian Quality Building Suppliers(the deceived party).
  2. It can be argued that fromSteuart’s v Hartline reasoning, the courtwill undoubtedly treat the case as that of a “wrong” that could occur thereafter, and out with, the execution of the contract requirementsresulting to liability in loss for Lothian Quality BuildingSuppliers.
  3. Arguably, the non-mistaken party (A)did not act in good faith, and that gives the mistaken party (Lothian Quality Building Suppliers)the power to rescind the contract at will.
  4. Party A cannot hold Lothian Quality Building Suppliers to supply the goods at the advantageous price, and, Lothian Quality Building Supplierscan lawfully invalidate the contractand decline to supply the requested goods (See Gloag, p 438).
  5. RELATE THE LAW TO THE FACTS:
  6. Even though the private law of remedy of damages can only apply ifLothian Quality Building Suppliers was to sustain liability in loss through party A’s breach of some delictual or contractual obligation, Lothian Quality Building Suppliers can still identify a legitimate basis for a claim in damages arising from, “in the broadest sense,” out of the contract (Gloag, Contract (2nd ed), 437-439; McBryde, Contract(3rd ed), 15-30 to 15-33; MacQueen& Thomson, Contract (2nd ed), 4.53-4.55.)
  7. As a matter of fact and law, the absence of good faith is a “plus” factor supporting the rescinding effect by Lothian Quality Building Suppliers’unilateral mistake, based on the provision that, party A acted in knowledge of the mistake and purposed to take advantage of it.
  8. In any case dependent on allegations of dishonest misconduct and deliberate wrongdoing, an “error known to and taken advantage of,” is seen to subsume and eclipse the exploitation concept as claimed by Lothian Quality Building Suppliers.
  9. CONCLUSION:

The question posed in this discussion is whether unilateral mistake “error known to and taken advantage of’can be to be assumed to be a necessary justificatory reason for voiding a contract, particularly when the motive for not acting in good faith ismeant to defraud the other party, as understood to rest upon Scottish justice foundations.  Thus, party A should understand that Lothian Quality Building Suppliers has the power to rescind the contract, restoring both parties to the original position before the contract was entered into,in the case that, he (party A),continues to insist that they (Lothian Quality Building Suppliers) supply the goods at the advantageous price.