LAW Using the IRAC method Minh has a large jewellery collection and likes to inv
ID: 416033 • Letter: L
Question
LAW
Using the IRAC method
Minh has a large jewellery collection and likes to invest in precious jewels, such as diamonds. Minh saw a beautiful diamond ring in the window of Fine Jewellers. She spoke to the sales person who thought the diamond was of very high quality. Minh purchased the diamond for $5,000 and shortly after had it valued for insurance. The expert who valued the diamond said, “This is worth about $100, it is full of flaws and rubbish quality.” Both Minh and Fine Jewellers were shocked, as they had both believed the diamond was a genuine high quality diamond. Advise Minh whether or not she can avoid the contract and get her money back because of the mistake. Use relevant cases to support your answer. Do not discuss the Australian Consumer Law.
Explanation / Answer
The IRAC method is simply a technique to answer a question in four steps:
Minh who had large jewellery collection purchased a diamond after speaking to the sales person of the company for $5,000 after she saw a beautiful diamond ring in the window of Fine Jewellers. As per sales person the diamond was of very high quality. Minh got it valued for the purpose of insuring but after getting it valued she found that the diamond was only worth $100. Both Minh and Fine Jewellers were shocked, as they had both believed the diamond was a genuine high quality diamond. Advise Minh whether or not she can avoid the contract and get her money back because of the mistake.
As per the contract law, if both or any one party believed certain facts to be true due to which they enter a contract, then the contract is referred to as void ab initio or can be revoked by either of the parties. Further, the victim party can file a suit seeking remedies for the losses incurred to them.
Mistakes can be classified as mistake of law and mistake of facts.
Further mistakes can be classified into four categories:
A mutual mistake is said to exist if both the parties are mistaken for any material thing. Here, it can be seen that both the parties were mistaken regarding the diamond.
(A similar case to this is Griffuth v Brymer (1903) 19TLR434. In this case the agreement is void).
Being a seller, it is the prime duty to sell the certified products to a buyer. The theory of “caveat emptor” must be followed. Though the incident happened because of a mistake and not purposefully, the contract can still be revoked and remedies can be asked for by Minh.
As per the section 154 of contracts both the parties committed mutual mistake and thus, the contract is void ab initio. Thus Minh can seek the remedies.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.