Question

Question One

Janet and Sid are friends who communicated by letter on a weekly basis. Sid wrote to Janet on 1 May and at the end of the letter asked:

“By the way, would you ever sell that old VW kombi van in your garage?”

Janet wrote back:

“I probably would sell the old VW. But if I did, I would want the $5000 back that I paid for it.”

Sid replied:

“OK, you always did drive a hard bargain. I’ll accept the VW for $5000.”

Janet, immediately upon receiving the letter replied:

“You are the one who drives a hard bargain. You can have the van for that price. But I want another $250 for the roof rack which I just put on it.”

Sid was offended by her friend’s attitude and on 1 July replied:

“Well, would you make sure that it had a current warrant of fitness?”

Janet by this point was tired of the whole issue and decided not to write to Sid for a while. Sid, after realising that the money was not worth arguing over, wrote to Janet on 12 July and stated:

“Janet, I’ll take the van as it is for $3250.”

On the way to post the letter, Sid met an old friend who said that her son had just bought the van from Janet and was coming to town for a visit. Sid ignored the conversation and posted the letter to Janet at 3 pm on 12 July.

Janet had been discussing selling the VW to Jake, who was the son of the friend Sid had met. Jake had offered $3500 and Janet had accepted. She had posted a letter to Sid to tell her that the van had been sold. This letter was posted at 2.50pm on 12 July.

REQUIRED:

Advise Janet and Sid whether there is a binding contract between them for the sale and purchase of the VW van.

Answer 1

Issue: SId had made an offer to buy Janet's VW van. Janet initially did not make a firm offer, only saying that she would "probably' sell it for $ 5,000. Jake accepted, to which Janet wrote back saying that she was willing to sell it for not less than $ 5,250. Jake ponders over this, and finally makes a counter offer of $ 3,250. But in the meantime, Janet has sold the van to Jake for $ 3,500. Is there a binding contract between Sid and Janet for purchase and sale of the van ?

Law: For a binding contract to be there, there needs to be an accepted offer.

An offer is therefore the starting point of a contract. The offer if accepted, leads to an agreement.

For the agreement to be binding and enforceable, the parties to the contract must be competent to contract, their consent to the contract must have been free, the agreement must be supported by consideration, and the object of the contract must be lawful.

An offer can be revoked by the offeror any time before it is accepted by the offeree.

Application : Sid had made a written offer to Janet to purchase her old van. Janet gave a quote by saying 'I probably would sell the old VW. But if I did, I would want the $5000 back that I paid for it. " The word 'probably' raises the question as to her firm intention to sell.

Anyway, Sid accepted the price of $ 5,000. But Janet wrote back saying that she wants $ 250 more. This time she makes a firm offer, the offer price being $ 5,250.Sid took some time to think about this, and finally made a counter offer on 12th July 3 pm to buy the van for $ 3,250.

In the meantime, before, her offer to Sid was accepted by Sid, Janet had sold the van to Jake for $ 3,500 on 12th July 2.50 pm.

Conclusion : In the given situation, there was no acceptance of Janet's firm offer by Sid before she revoked it by selling the VW van to Jake. Therefore, there was no binding contract between Sid and Janet for purchase or sale of the VW van.