Question

Based on your reading of chapter 9 or the text (Reed, Pagattaro, Cahoy, Shedd, & Magid, 2015) and considering how a contract can be legally discharged and when a contract can be breached, respond to the learning activity below. As a new sales representative for Misco Equipment Corporation, you take a customer out to dinner. Before dinner is over, you have shaken hands on a deal to sell the customer nearly a half-million dollars' worth of industrial equipment. In writing up the formal contract the next morning, you discover that you miscalculated the equipment's price. Your error could cost Misco $60,000. You telephone your customer and explain the situation. Is the "deal" you made an enforceable contract? Assuming the contract is enforceable, does the mistake you made permit you to get out of the contract? What do you think will happen in this situation?

Answer 1

No, as per the contract obligaions, there is no actual contract yet. There has been only an offer from the sales representative, who is acting as an agent for Misco and as per law there needs to be agreement over the offer and then a contract must be signed between Misco and the customer for it to be made enforceable. So no as of now its not enforceable.

In case the contract is enforceable, then the mistake would cost Misco $60,000 and the customer will gain from it.

In this case the agent is the one who has made a mistake, generally while finalizing the deal or getting into the contract the details are also verified, but assuming these have been skipped. The $60.000 will be in some manner recovered from the Sales representative, as its a mistake from him.

But before that Misco would try with the help of the sales representative to modify the contract or try to move out of the contract through negotiations, if not possible then it will be certainly recovered from the sales person.