Question:
Please use the IRAC method when answering these questions.
Issue
Rule
Application
Conclusion
Valerie spots a rosewood bookcase in an antique shop owned by Jim and Belinda, which has a price tag of $4000. Valerie approaches Jim and tells him that she will take the bookcase for $2000. Jim says that it isn’t possible but how about $3000? Valerie says no, how about $2,500? Jim says no again, and he tells Valerie that his lowest price is $3000. Valerie does not reply that she will accept the bookcase for $3000 and she steps away from Jim to take a call on her mobile phone. While Valerie is talking on her mobile phone, Jim turns to serve another customer Isabella. After finish talking on her mobile phone, Valerie then turns to pay for the bookcase, but Jim says he has already sold it to Isabella for $4000. Valerie is furious and says that she and Jim had a contract, and the bookcase was hers.
1. As between Valerie and Jim, who made the offer? (4 marks)
2. As between Valerie and Jim, who accepted the offer and was the acceptance valid? (3 marks)
Jim’s wife Belinda runs the rare stamps section of the business and conducts much of the business through the post. On Monday, she wrote separate letters to two of her regular customers, Eddie and Joseph, offering to sell them some rare stamps for $1500. Eddie received Belinda’s letter at 5 pm on Tuesday and immediately posted a letter of acceptance to Belinda on Wednesday at 9 am. Joseph also received Belinda’s letter of offer on Tuesday, and went to Belinda’s shop at 10 am on Wednesday and happily bought the rare stamps. On Thursday, Belinda received Eddie’s letter of acceptance and consequently Belinda telephoned Eddie and informed him that she had already sold the stamps to Joseph. Eddie is certain that he is entitled to the stamps.
3. Is Eddie correct to say that he is entitled to the stamps by arguing that his letter of acceptance was effective? (3 marks)
Jim and Belinda frequently exhibit their rare stamps and antique collection to promote their business. Belinda asks one of her sisters, Nicky who is looking for a job to organise and exhibit their collection. Belinda is overjoyed with Nicky’s performance and she does not want Nicky to stop helping her. A couple of months later, Nicky receives a good job offer from the National Philatelic Gallery. Belinda tells Nicky that if she stays to work for her until the end of the current exhibition, she will “give her some of the rarest stamps in her collection that are worth a lot of money”. Nicky agrees to give up her good job, so Belinda asks her lawyer to record her promise in a written agreement. A month after the exhibition has ended, Belinda refuses to hand over the rarest stamps to Nicky and she tells Nicky that agreements between family members are not binding.
4. Can Nicky enforce the agreement against her sister, Belinda? (5 marks)
Jim has been hiding a secret from Belinda that he has a girlfriend, Sheena for the last 5 years. They met when they were enrolled in a website design class. Jim has been spoiling Sheena by giving her a lot of money every month. Recently, they have been quarrelling a lot and Jim has decided to recover the money he has given to Sheena. He says to his lawyer that the money had been a loan, not a gift. Sheena disagrees and claims that the money had been a gift. After they have calmed down, they meet up to patch things up. Jim and Sheena draft and sign a document before Jim gives it to his lawyer to formalise it. In the document, Jim agrees that he will not recover the money he has given to Sheena, but that Sheena is to help him in his online business that has not been doing well. In exchange for Jim’s promise, Sheena agrees to help Jim with his online business because Jim needs Sheena’s website design skills to improve his online business.
5. Has Sheena given valid consideration for Jim’s promise? (5 marks)
Answer:
ANSWER:1(1)
ISSUE
An offer is made when one person shows his desire to enter into a legally binding contract with another person. An offer must be conveyed to the other side, be straightforward and definitive, and provide a formal agreement between the parties in order to be legitimate. An offer must be approved by the individual to whom it is offered in order to form a legal relationship.
RULE
In this case, the antique bookcase was shown as an invitation to treat, which is clearly described as an indication of willingness to bargain. When the person issuing the invitation to treat (Jim), he expects prospective buyers to make proposals, and when he agrees one of the offers, a legally binding contract is formed.
ANAYSIS
In our case, Valerie offered a 2,000-dollar bid on the antique bookcase, which Jim declined and countered with a 3,000-dollar offer. Valerie declined the counter bid and countered with a 2,500-dollar offer, which Jim again rejected and countered with a 3,000-dollar offer. Valerie declined the counter bid and went to answer a phone call. Valerie and Jim did not have a valid deal. Jim and Isabella had already created a legal deal for the selling of the antique book case for 4,000 dollars when she returned.
CONCLUSION
In the case of Valerie and Jim, Valerie offered a 2,000-dollar bid on the antique bookcase, which Jim countered with a 3,000-dollar offer.
ANSWER:1(2)
ISSUE
The question here is whether Valerie and Jim had a legally binding agreement to sell the rosewood bookcase.
RULE
The law of acceptance is that when it is conveyed to the offeror, it is total correspondence.
ANAYSIS
Valerie did not express her approval of Jim's bid to sell the bookcase for $3,000 in this case.
CONCLUSION
Since Valerie did not express her approval of Jim's bid, Valerie did not have a deal with him for the sale of the rosewood bookcase. While a bid should be left available for a fair amount of time before being accepted, due to the nature of the company (an antique shop), Jim was unable to prevent any buyers from purchasing the bookcase as he waited for Valerie to consider his offer.Nobody rejected the deal, including Valerie and Jim. Though Jim made the original bid of $4,000, Valerie countered with a $2,000 counter-offer and a $2,500 counter-offer. Jim did not consider either bid because he made another offer of $3,000 to Valerie, but she did not express her approval to Jim, so it was invalid.
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