As a new sales representative for MEC you take a customer to

As a new sales representative for MEC, you take a customer to dinner. Before the evening 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 day you realize you made an error when computing the equipment price. Your error would cost your company about $60,000. You telephone the customer and explain the situation.

Is the deal you made an enforceable contract?

Does the mistake you made allow you to get out of an enforceable contract?

What do you think will happen in this situation?

Solution

Since the contract was meant to be in written and before both the parties sign on it, they came to know about the error. Therefore, this contract is not enforceable. This was just an agreement with the customer.

Yes, we have sufficient time to correct the error as it is not signed by the parties. Once, it signed by the parties, it will become enforceable.

As this contract is not enforceable to any of the parties and Sales representative is going to change contract price, the customer may refuse to sign the contract letter. And hence, there would be no contract between them. Also, the customer may go ahead and sign the contract with the new terms. Once signed, it will be enforceable to both the parties.