Peter wants to sell one of his cars that has a diesel motor to his nephew...

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Accounting

Peter wants to sell one of his cars that has a diesel motor tohis nephew Brett. Brett is eager to purchase the car but Brett doesnot realise that one of his uncle’s cars is diesel.
Peter writes a letter to Brett as follows:
         “DearBrett,
I know that you are interested in buying one of my cars. I wouldlike to give it to you but I know that you won’t accept charity.Therefore I will offer it to you for $500 (I reckon it is worthabout $2,000). If I don’t hear from you by this Friday I take itthat you are happy to buy it for $500. I will then drop off the carto your place on the weekend.”
Regards,
         Peter”
Brett does not see the letter and there is no furthercommunication between Peter and Brett.
On Saturday, Peter delivers the diesel motor car to Brett’shome. Brett arrives home to discover the letter and the car fromhis uncle. Brett realises the car is diesel and he does not reallywant the car. However, Brett decides the car is still useful andstarts driving the car to and from university. After three weeksdriving the car Brett decides that he will return the car. He hasnot yet paid Peter any money. Peter thinks Brett is ungrateful anddemands full payment.
Brett wants to return the motor car to his uncle. Peter is angrywith his nephew and he demands payment for the car. Peter says hewill lodge a small claim and sue Brett for the money. Brett states“we are family and you can’t sue me.”
Explain whether the uncle/nephewrelationship has any effect on whether or not there is a bindingagreement.   6 marks)

On the same telephone call Brett also says to Peter that “Thereis no contract because I never agreed to anything. Peter says “It’sa bit late to return the car now. You’ve been driving itaround”.
Has Brett accepted an offer from Peterto purchase the motor car?
On the same telephone call Peter says that “I was being nice toyou and offering you the car at ‘mates rates’.
Could $500 be valid ‘consideration’for a contract to sell the diesel motor car? Explain why/whynot?

Brett tells Peter on the same telephone call “Even if you canconvince the judge that there was an agreement, I can get out of itbecause I didn’t know you had a diesel car and I never wanted adiesel car. I thought all your cars were petrol”. Is it correctthat Brett can avoid contractual obligations on the basis of hismistaken belief? Why/why not?

Answer & Explanation Solved by verified expert

3.6 Ratings (636 Votes)

1 Unclenephew relationship does not have any effect on whether or not whether there is a binding agreement There should be an intention on the part of both parties to form a contractual See Answer

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Transcribed Image Text

Peter wants to sell one of his cars that has a diesel motor tohis nephew Brett. Brett is eager to purchase the car but Brett doesnot realise that one of his uncle’s cars is diesel.Peter writes a letter to Brett as follows: “DearBrett,I know that you are interested in buying one of my cars. I wouldlike to give it to you but I know that you won’t accept charity.Therefore I will offer it to you for $500 (I reckon it is worthabout $2,000). If I don’t hear from you by this Friday I take itthat you are happy to buy it for $500. I will then drop off the carto your place on the weekend.”Regards, Peter”Brett does not see the letter and there is no furthercommunication between Peter and Brett.On Saturday, Peter delivers the diesel motor car to Brett’shome. Brett arrives home to discover the letter and the car fromhis uncle. Brett realises the car is diesel and he does not reallywant the car. However, Brett decides the car is still useful andstarts driving the car to and from university. After three weeksdriving the car Brett decides that he will return the car. He hasnot yet paid Peter any money. Peter thinks Brett is ungrateful anddemands full payment.Brett wants to return the motor car to his uncle. Peter is angrywith his nephew and he demands payment for the car. Peter says hewill lodge a small claim and sue Brett for the money. Brett states“we are family and you can’t sue me.”Explain whether the uncle/nephewrelationship has any effect on whether or not there is a bindingagreement. 6 marks) On the same telephone call Brett also says to Peter that “Thereis no contract because I never agreed to anything. Peter says “It’sa bit late to return the car now. You’ve been driving itaround”.Has Brett accepted an offer from Peterto purchase the motor car? On the same telephone call Peter says that “I was being nice toyou and offering you the car at ‘mates rates’.Could $500 be valid ‘consideration’for a contract to sell the diesel motor car? Explain why/whynot? Brett tells Peter on the same telephone call “Even if you canconvince the judge that there was an agreement, I can get out of itbecause I didn’t know you had a diesel car and I never wanted adiesel car. I thought all your cars were petrol”. Is it correctthat Brett can avoid contractual obligations on the basis of hismistaken belief? Why/why not?