Exam 3: Formation of a Valid Contract

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

Mr.Madison went into a supermarket where he saw a new kind of toothpaste on a shelf,ticketed at $2.69.He decided to try it,so he took it to the checkout and placed it on the moving counter.The staff member at the checkout rang up the sale,took Mr.Madison's money,put the toothpaste in a bag,and handed it with the receipt and the change to Mr.Madison.A contract was formed when:

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

Mario responded to an advertisement placed by Serge in a local newspaper.Serge was looking for business investments,and Mario sent him a letter on October 1 that said he was willing to make Serge a partner in his tie-dyed T-shirt business if Serge was willing to put up $5,000.Serge received that letter on October 6 and wrote back the same day saying he would love to get involved in the business and would send Mario a certified cheque for $5,000 as soon as the bank had transferred the money from his savings account and certified the cheque.This letter was received by Mario on October 9,and the certified cheque was sent on October 8 and received on October 12.Meanwhile,Mario mentioned the advertisement to Sonia,and she said she would like to get into the business and would be willing to put up $8,000.Mario sent another letter to Serge,on October 4,which Serge received on October 7,saying Mario had changed his mind and would not be willing to have Serge as a partner. -Suppose Mario's letter of October 1 said that there would be no commitment by him to any arrangement with Serge unless and until he received Serge's certified cheque for $5,000.

Mabel and Leon were having marital problems and had an argument one morning over whether or not Leon should buy a motorbike.Mabel went to her sister Nancy's home where the two women talked about life and drank vast quantities of wine.Very drunk,Mabel decided everything was her fault.She went to a local motorbike store,selected one she knew Leon wanted,but had rejected as being too expensive,and paid for it with her credit card.The salesman had no idea she was drunk.The next day,she had no memory of the transaction and was horrified to find out what she had done.Mabel discovered the sales slip and the motorbike outside,and called the company at once to tell them she is returning it immediately.

Franklin Motors Ltd.makes an agreement to buy 3,000 widgets for $1,000 from Stovely's Engineering Co.The law presumes that,unless one of the companies proves otherwise,they intended this agreement to be a legally binding one.

Smith 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." Smith nodded affirmatively.The two then went about their separate business.Later in the day,Smith met Brown,who also had a canoe for sale,and Smith offered to purchase Brown's canoe for $175.Brown agreed to sell Smith his canoe.At 4 p.m.the same afternoon,after Smith and Brown had made their arrangement,Jones telephoned Smith to say he would accept Smith's offer to buy his canoe. -Smith's offer to buy the canoe from Jones was a genuine expression of his intention to create a legal relationship.

Smith 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." Smith nodded affirmatively.The two then went about their separate business.Later in the day,Smith met Brown,who also had a canoe for sale,and Smith offered to purchase Brown's canoe for $175.Brown agreed to sell Smith his canoe.At 4 p.m.the same afternoon,after Smith and Brown had made their arrangement,Jones telephoned Smith to say he would accept Smith's offer to buy his canoe. -Smith and Jones established a binding contract when Jones telephoned Smith and accepted Smith's offer to buy his canoe for $200.

Jones Construction asks for bids for subcontracts on a building it is to construct.The successful bid will be an acceptance of Jones's offer.

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

Smith 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." Smith nodded affirmatively.The two then went about their separate business.Later in the day,Smith met Brown,who also had a canoe for sale,and Smith offered to purchase Brown's canoe for $175.Brown agreed to sell Smith his canoe.At 4 p.m.the same afternoon,after Smith and Brown had made their arrangement,Jones telephoned Smith to say he would accept Smith's offer to buy his canoe. -The contract between Smith and Brown automatically rescinded the offer that Smith had made to Jones.

Anderson,a city employee,collected garbage along Smith's street on Thursday of each week.One day Rick said to Anderson: "You have done such a good job,I will give you $10 when you come by next week." The next week,when Anderson made his regular garbage pickup for the city,he met Rick and asked for the $10.Rick refused to pay. -Rick is not obliged to pay Anderson the $10,because his promise was gratuitous.

Dimitri wrote to Pat offering to sell his neo-expressionist painting "Red Sails in the Sunset" for $25,000.Pat replied that he could not really pay more than $18,000 for the painting.Dimitri replied that he was greatly hurt and deeply insulted by such an offer,especially from someone who was supposed to be a connoisseur of fine art,but that,since he was a little tight for cash,he would be willing to let it go to Pat for $13,000 for old times' sake.Pat immediately replied,saying that he accepted the painting at $13,000 and enquiring whether Dimitri wanted it in cash.Dimitri then realized that he had typed "$13,000" instead of "$23,000" in his second letter to Pat.

Kesler,while in a drunken state,purchased a large sailboat from Mullen. -Kesler may avoid the contract with Mullen,if,on his return to a sober state,he promptly repudiates the contract,and can prove that Mullen was aware that he,Kesler,was intoxicated at the time the contract was made.

Rosa offers Valerie the chance to buy Rosa's cottage for $25,000.Two days later,while Valerie is still considering the offer,Rosa's sister mentions to Valerie that Rosa has sold the cottage to Ben for $30,000.If Valerie now accepts,Rosa will be liable for breach of contract.

James,a 16-year-old youth,got a job for a catalogue company selling household items that he ordered from the business and sold to his customers.James's grades at school suffered as a result of his job,and he was forced to give it up.He returned the goods he had purchased on credit,and notified the company that he was discontinuing his employment.The company contacted James,and told him that by having the goods in his possession the company had lost revenue opportunities.It then billed James for the cost of the goods.James is obliged to pay.

Mabel,a young woman aged 17,went shopping.She purchased a new coat on credit at a clothing store.Later the same day,she took her expensive watch to a jewellery shop to have a new watch band installed.While in the shop,she purchased on credit an additional watch for herself,and a silver bracelet as a gift for a friend.When the merchants later requested payment,Mabel refused to pay. -As a minor,Mabel would not be liable to pay any of the debts.

Susan offered to pay $500 for a ring that Daria has agreed to sell to her.Each woman has given consideration to the other for her promise.

Wade,an Ontario resident,ordered a customized motor bike on February 1 with delivery on June 1.On his 18th birthday,on May 1,Wade decided that he wanted a wind surfer instead,so he called the motorbike company the next morning and cancelled the contract.The payments would have been made on a 24-month basis.

Jack makes an offer to Jill by mail,because she cannot be reached by telephone.She replies by mail,accepting the offer.Canada Post loses her reply for several weeks.Jack,who has given up waiting to hear from her,has entered into the contract with someone else after waiting for a reasonable time.Jill can successfully sue Jack for breach of contract.