INTRODUCTION

A contract is a promise, or set of promises, for breach of which the law gives a remedy, or the
performance of which the law in some way recognize as a duty. 1 The purpose of this academic
writing discusses the legal issues surrounding parties to a contract and participants in an auction
sale. In the midst of Chanda's appointment as an ambassador to Zambezia, he faced the pressing
task of selling his surplus furniture and household items before his departure. Seeking the
assistance of professional auctioneers, Chanda invited applications from various firms and
ultimately selected Misozi Auctioneers. However, what initially seemed like a smooth
transaction turned into a series of complications after the auction took place. This report delves
into the issues faced by Chanda and two other clients, who found themselves entangled in
disputes with Misozi Auctioneers over breach of contract and miscommunication regarding the
agreed-upon terms and conditions. By examining the events that unfolded during and after the
auction.

The general rule is that an auctioneer by inviting bids to be made makes an invitation to treat.
The offer is made by the bidder which, in turn is accepted when the auctioneer strikes the table
with his hammer, The advertisement of an auction sale is generally only an invitation to treat. 2

The first legal issue focuses on whether Chanda's contract with Misozi's auctioneers is void ab
initio due to a mistake in the terms of the contract. The second legal issue examines whether an
auction sale constitutes an offer and whether it can be considered a breach of contract. To
address these issues, relevant case law and principles of contract law will be analyzed.

The principle of void ab initio states that a contract is void from the beginning if one party is
mistaken about the nature of the contract, and the other party is aware of the mistake or should
be reasonably aware of it. This mistake must pertain to the terms of the contract itself. The
initial legal question pertains to whether Chanda's contract with Misozi's auctioneers is void ab
initio. Void ab initio refers to a situation where one party is mistaken about the contract's nature,
and the other party is aware of this mistake or should reasonably be aware of it. When such
circumstances occur, the contract becomes invalid. To be considered operative, the mistake must
be related to the terms of the contract itself.
1
Steve H, Gifis’s law dictionary, 3rd Edition, 1991
2
. British car Auctions Ltd v. Wright [1972] 1 WLR 1519

1
Chanda signed a contract with Misozi Auctioneers without thoroughly reading it, and the
contract he signed had different terms from the one he intended to offer. such a contract requires
a "meeting of the minds," meaning both parties must agree to the same terms and understand the
terms they are entering into. In the case of Raffles v. Wichelhaus,3 In this case, two parties
agreed to buy and sell cotton. However, they were referring to different ships with the same
name, leading to a dispute. The court held that there was no contract because there was no
mutual understanding of the subject matter.

Furthermore, the case of Hartog v Colin & Shields4 illustrates this concept. In this case, the
defendants, who were hide merchants in London, entered into an oral agreement with the
complainant, Hartog, a furrier from Belgium, to sell him 30,000 Argentinian hare skins at a price
of 10d per skin. However, a mistake occurred in the written agreement, where the defendants
incorrectly stated that they would sell the complainant 30,000 hare skins at 10d per pound. As a
result, the price difference was one third cheaper for the complainant compared to the previously
agreed-upon terms. Despite Hartog accepting this offer, the defendants refused to fulfill the
contract.

It was held that there was no contract between the complainant and the defendant. Any contract
would be void by the mistake of the hare skin price; the complainant would have known that it
was normally sold per piece and not by pound. The court said that there is a duty to correct a
mistake that is known to not be the real intention of the person making it. You cannot simply
take advantage and ‘snap up’ the offer.5

As a general principle, a person is legally bound by their signature on a document, regardless of

whether they have fully read or comprehended its contents. This principle is exemplified in the
case of L'Estrange v Graucob.6 In this case, the claimant, L'Estrange, entered into an agreement
with the defendant, Graucob, to purchase a slot machine for cigarettes. The agreement contained
an explicit clause stating that all terms and conditions related to the purchase were included in
the agreement, and any other conditions, statements, or warranties, whether expressed or
implied, statutory or otherwise, were excluded. The crucial issue was whether the clause

3
[1864] EWHC Exch J19
4
[1939] 3 All ER 566
5
Ibid
6
[1934] 2 KB 394

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excluding all terms not explicitly stated in the contract should be considered legally effective and
binding, the court held that L'Estrange's failure to fully read the contract did not affect its validity
since, by signing the contract, she consented to be legally bound by its contents. The court
emphasized that clauses in a written contract are binding on the signatories, even if a party is
unaware of the contract's complete contents.

The only exceptions to this general rule occur when a person claims non est factum, which
means that they were induced to sign the contract due to fraud or misrepresentation. 7 In such
cases, the transaction becomes voidable. For a successful plea of non est factum, two factors
must be established: first, the signer was not careless in signing the document, and second, there
is a significant difference between the document that was signed and what the signer believed
they were signing.8

In the present scenario involving Chanda and Misozi auctioneers, Chanda sent a formal contract
to Misozi auctioneers, constituting an offer to enter into a contract. However, Misozi auctioneers
responded with a counteroffer, proposing new terms that deviated from the original offer. As per
the precedent established in Hyde v Wrench,9 a counteroffer that rejects a fundamental term of
the original offer extinguishes the original offer, rendering it unavailable for acceptance.
Consequently, Chanda could not accept the initial offer after receiving the counteroffer.

By signing the contract sent by Misozi auctioneers, Chanda effectively accepted the new offer
presented in the counteroffer. This act of signing constitutes valid acceptance, and Chanda is
legally bound by the terms specified in the counteroffer. This legal principle aligns with the
ruling in L'Estrange v Graucob,10 which holds that clauses in a written contract are binding on
the signatories, irrespective of whether a party is fully aware of the contract's complete contents.
Therefore, Chanda is obligated to abide by the terms of the contract, and the fact that they did not
thoroughly read it does not impact its validity.

The second legal issue concerns the nature of an auction sale as an offer and whether such an
offer can lead to a breach of contract. In the context of auction sales, the general rule is that an
auctioneer, by inviting bids, makes an invitation to treat, not a binding offer. The actual offer is
7
Cheshire, Fifoot & Furmston’s (2001 edition), Law of Contract, 14th ed, London: Butterworths.
8
Ibid
9
(1840)
10
L'Estrange v Graucob [1934] 2 KB 394

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made by a bidder, and it is accepted by the auctioneer when they strike their hammer. At this
moment, the contract is formed between the highest bidder and the owner of the goods being
auctioned. It is essential to recognize that the auctioneer merely acts as the owner's agent during
the auction process.

The legal precedent in British Car Auctions Ltd v. Wright11 reinforces this principle, where it
was held that an advertisement for an auction sale is typically an invitation to treat, not a binding
offer. Instead, each lot presented in the auction serves as an invitation for bids, and when a
bidder offers a price, it is considered an offer to buy the lot. The acceptance occurs when the
auctioneer's hammer falls, signifying the conclusion of the contract between the highest bidder
and the owner of the goods.

In the case of Harris v Nickerson,12 the defendant, an auctioneer, advertised the sale of various
items, including brewing materials, plant, and office furniture, in the London papers. The
plaintiff, a commission broker, attended the auction on the final day, intending to purchase the
office furniture on behalf of a client. However, on the day of the auction, all the lots of furniture
were withdrawn by the defendant.

The central question in this case was whether the advertisement posted by the defendant
constituted a legally binding offer of sale, and if the claimant's attendance at the auction resulted
in the formation of a completed contract. The court, in dismissing the claimant's case, held that
the advertisement served merely as a declaration to notify potential buyers of the sale taking
place. It did not amount to an offer to contract with anyone attending the auction, nor did it
guarantee that all the advertised items would be available for sale on a specific day.
Consequently, the defendant was not legally bound to auction the specified items on any
particular day.

Regarding the first client's intention to sue for breach of contract, it is not valid according to the
precedent set in British Car Auctions Ltd v. Wright,13 where it was established that an auction
sale does not constitute an offer but an invitation to treat. In this context, the first client only
made an offer to purchase, and it was within the auctioneer's discretion to accept or reject the

11
[1972] 1 WLR 1519
12
(1872) LR 8 QB
13
British car Auctions Ltd v. Wright [1972] 1 WLR 1519

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offer. As there was no formal acceptance by the auctioneer, no contract was established between
the parties, thus rendering the claim for breach of contract unfounded.

Based on the legal analysis provided, there are two key legal issues at hand. The first issue
involves Chanda's contract with Misozi's auctioneers, where a mistake in the terms of the
contract can render it void ab initio. It is crucial to assess whether the mistake in the contract's
terms was significant and whether both parties were aware of the mistake or should have been
reasonably aware of it. If the mistake indeed renders the contract void, Chanda cannot be bound
by the terms of the contract. The second issue pertains to the nature of an auction sale and
whether it constitutes a legally binding offer or simply an invitation to treat. In line with the legal
precedent set in British Car Auctions Ltd v. Wright,14 an auction sale is generally considered
an invitation to treat. The auctioneer's invitation for bids does not create a binding offer until a
bidder makes an offer, and the auctioneer accepts it by striking the hammer. Consequently, the
first client's intention to sue for breach of contract in this context may not be valid, as no contract
was formed solely based on the auction sale advertisement.

This means that the infuriated client claims breach of contract, arguing that Misozi Auctioneers
failed to reserve the dining set for him despite his request. In the case of Barry v. Davies,15 In
this case, the court held that if an auctioneer advertises an item as being reserved and then sells it
without following the reservation, it could be a breach of contract.

CONCLUSION

The case of Chanda and the two clients against Misozi Auctioneers underscores the importance
of clear communication and careful examination of contractual agreements. Therefore, Chanda
should carefully examine the terms of the contract with Misozi's auctioneers to ascertain whether
any significant mistakes invalidate the agreement. If the contract is indeed void ab initio due to a
substantial mistake, Chanda may not be bound by its terms. On the other hand, the first client's
claim for breach of contract may not stand, given the nature of auction sales as invitations to
treat. However, each case's specific details and evidence should be thoroughly reviewed to
provide a comprehensive legal conclusion and advice to the parties involved.

14
British car Auctions Ltd v. Wright [1972] 1 WLR 1519
15
[2000] 1 WLR 1962

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 BIBLIOGRAPHY

BOOKS

6
Cheshire, Fifoot & Furmston’s (2001 edition), Law of Contract, 14th ed, London:
Butterworths.

E. Allan Farnsworth 2013 Contracts: Cases and Materials

Steve H (1991), Gifis’s law dictionary, 3rd Edition,

CASES

Barry v. Davies [2000] 1 WLR 1962

British car Auctions Ltd v. Wright [1972] 1 WLR 1519

Harris v Nickerson (1872) LR 8 QB

Hartog v Colin & Shields [1939] 3 All ER 566

Hyde v Wrench (1840)

L'Estrange v Graucob [1934] 2 KB 394

Raffles v. Wichelhaus [1864] EWHC Exch J19