Exam 7: An Introduction to Contracts

Busy Corp. sent a letter on January 12^th to Slow Co. offering to sell its main office building for $250,000, stating that its offer was open only until January 20^th, and it must have a response from Slow Co. by then. Slow Co. received the letter on January 14^th and prepared a letter of acceptance on that day but had not posted it. The next morning Busy Corp. called and said that it had changed its mind and was withdrawing its offer.

Victor has breakfast at the Kute Kafey. From the menu, he orders buttered muffins "homemade like your mother's," jam "made with loving care and fresh ingredients," and tea "fresh-picked from the cool hillsides of an Indian plantation." Actually, the muffins are nothing like Victor's mum's muffins and are baked in a factory, the jam is mass-produced from industrial-quality frozen fruit, and the tea is made with no-name tea bags. Victor has a good case for breach of contract.

Johnson became a member of the Book-a-Month Club under an agreement by which members agree to pay for any monthly selection that they have not notified the Club they do not want. Johnson forgets to tell them when he decides he does not want "How to Cook Small Rodents" and the book arrives at his house.

Giardetti, a retailer, placed an advertisement in a local newspaper on May 5^th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10^th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10^th customer in the store on May 10^th, but Giardetti refused to sell him a TV set for $100. If Giardetti had placed a notice on his shop door on May 9^th which read: "Sale cancelled," his notice would revoke the offer made in the newspaper on May 5^th.

Paulette Paulson Furs advertises mink coats for sale at 30% off. The demand was much greater than anyone could have predicted, and 14 people who came to the store could not be provided with one of the sale coats. Since they had accepted Paulson's offer, she will have to find coats for them or be in breach of their contracts.

On July 23^rd, Carson, who lived in Bytown, wrote a letter to Henri, offering to sell his (Carson's) vintage car for $18,000. The letter was delivered to Henri in his home in Mount Royal, an hour's drive away, on July 27. On July 24^th, Carson met his friend Jack on the street. Jack expressed an interest in buying Carson's vintage car. He offered Carson $18,000 for the car, but Carson said only that he would "give the offer some thought," and promised to advise Jack of his decision. Carson did not tell Jack of his offer to sell the car to Henri. On July 25^th, while on vacation in York, Jack sent a fax to Carson, offering to buy the car for $18,250 if Carson would deliver the car, on July 30^th, to his farm, located some 20 km west of Bytown. Carson received the fax the same day and, that evening, wrote and mailed a letter to Henri, revoking his offer to sell the vintage car. On July 28^th, Henri wrote a letter to Carson accepting his offer to sell the vintage car and enclosed a cheque for $18,000 as payment in full. On July 29^th, Henri received Carson's letter revoking the offer. Carson had business west of Bytown on July 29^th, and since his trip would take him past Jack's farm, he decided to deliver the vintage car on his way. Carson left the car on a trailer at Jack's farm, but finding no one at home, left the keys to the car and a note in Jack's mailbox. The note stated that he had left the car behind the garage. On July 30^th, Carson received the letter of acceptance Henri had mailed to him on July 28^th. Carson immediately telephoned Henri to tell him he had sold the car to Jack, but Henri was out of town on a business trip. Carson left a message with Henri's wife and, on July 31^st, returned by mail the cheque that Henri had sent him with the letter of acceptance Later on July 31^st, Carson received a telephone call from Jack who had just returned from Toronto requesting delivery of the car. When Carson explained that the car had been delivered on July 29^th, Jack stated that the car was not behind the garage. Carson then requested Jack to call the police to investigate the theft. Later in August, the police located the car in the possession of a minor and an arrest was made. Unfortunately the car had been badly damaged while in the thief's possession. The estimate of damages was $12,000. Discuss the issues raised in this case. Describe the rights of the parties (if any) and the possible outcome of any litigation if legal action should be taken to enforce the rights of the parties.

A computer software company advertised a new organizational program as one of the most "user friendly" programs of its kind on the market. The Smallville police department used the program and, during operation, the program collapsed, losing vital information related to the effectiveness of the department in carrying out its duties. Under the law of contract, what is the software company's position with respect to liability?

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Brown's acceptance of Rahul's offer was unconditional.

Jill has been negotiating the purchase of a speedboat with Sandi during the past two weeks. Two days ago, she wrote to Sandi, saying "I won't go any higher than $8,000. Take it or leave it, but that's my final offer." By coincidence, Sandi sent a letter the same day which said "I won't take less than $8,000, so if you can't accept that, I'll have to look elsewhere for a buyer." The letters have both arrived today at their destinations. There is a contract between Jill and Sandi.

As you are walking out of class one night, you discover a notebook, full of equations, belonging to a professor in your school. You write a note telling him who you are and where and when you found it. Then you put the note in an envelope and drop it into one of the university's internal mailboxes. The next day the campus is covered with notices which say "$100 REWARD. A notebook containing mathematical explanation of the meaning of life has been lost. If found, please return to Professor Doddering in Room A123."

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul and Brown established a binding contract which both parties are obliged to perform.

At a computer fair, Porter saw a demonstration by Maxwell of an excellent new accounting software package published by Slyckbyte Co., but he felt it was overpriced at $900. "At $500," he said, "I would definitely buy it." Maxwell said that she was not authorized to give deals to anyone, not even such a good customer as Porter. Porter bought another package from a different company. Four days later, he received a package from Maxwell that contained the new software and a letter which said that Slyckbyte was happy to give him the discount he had wanted and that she looked forward to receiving his cheque within the next few days. Discuss whether Porter must pay for the software.

Giardetti, a retailer, placed an advertisement in a local newspaper on May 5^th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10^th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10^th customer in the store on May 10^th, but Giardetti refused to sell him a TV set for $100. Giardetti's advertisement was only an invitation to do business, and not a valid offer to sell.

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer to Jones lapsed when Rahul agreed to purchase Brown's canoe.

Giardetti, a retailer, placed an advertisement in a local newspaper on May 5^th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10^th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10^th customer in the store on May 10^th, but Giardetti refused to sell him a TV set for $100. Giardetti's advertisement was a valid offer to sell, which Don accepted by being one of the first 10 customers at the store on May 10^th, and verbally accepting the offer.

If an acceptance is not unconditional, but changes the terms of the original offer, then it would have the effect of rejecting the original offer.

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer was merely an invitation to do business.

Robert has just mailed a letter of acceptance in response to James' letter offering to sell his hardware store to Robert, when he is knocked down by a car and killed. Jane, Robert's wife and sole heir, wants to run the business, since that is what she and Robert had intended, but James does not believe a woman could run a hardware store and tells her that the deal is off. Discuss Jane's legal position.

A trader on the floor of the Stock Exchange makes a deal with another trader by hand signals for the sale of a block of shares. This is a binding contract.

On June 1^st the Mega Marketing Research Firm sent out a mail survey to 5,000 potential customers of Mega's client company. The survey stated that everyone who completed the survey and mailed it back would receive a prize. Mega did not expect everyone to respond to the survey and had only 1,000 prizes on hand for the respondents. On July 14^th Sam mailed back his response and eagerly awaited his prize. On July 15^th Mega sent out the last prize it had. Sam's response arrived on July 16^th. It was the 1001^st and Mega wrote back telling Sam that unfortunately all the prizes were gone, and he would not be able to have one.