Business Law Case Study

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Case Summary:

-Bob owns a Jewelry store
-Sam operates electronic security equipment store
-Bob and Sam are friends
-Monday, Bob held a casual conversation with Sam about fitting his store with "closed circuit television and the best available electronic locks" -Tuesday, Sam sent Bob a Quotation of price "Lists of models and List of price" -Wednesday, Bob Replied BY POST. "Choice of Supreme Model for camera" -Posted to old address, Sam received on Saturday and emailed on the same day " Will deliver the goods by Monday" -Thursday, Bob wanted to cancel the contract, but couldn't reach Sam -Left a voice message, Sam received on Monday

Bob does not wish to take and pay for the goods

ADVISE in relation to Offer and Acceptance if an agreement has been formed. Key Issues
Was there an Invitation to Treat?
Who made the Offer?
Who made the acceptance?
Does Postal Rule Apply?
Revocation of Offer

First Issue: Was there an Offer? Who is the offeror?

In the given case, the quotation sent by Sam to Bob on Tuesday is not an offer, but a mere invitation to treat. The general rule distinguished statement of price from a legally binding offer. Sam's quotation of price was an attempt to invite Bob to make an offer to purchase the equipments. This fact is discussed in "Harvey v Facey", with the court found a mere statement minimum price does not contribute to an implied contract term to the person making an enquiry. The decision was made, based on the fact, the Defendant was merely answering the Plaintiff's enquiry regarding the price of the property, and this did not make an affirmative answer to the first question regarding his willingness to sell. The court held that the Defendant had made an invitation to treat and not an offer. (Cited, 3 March 2009) Similarly, in order for Sam's quote to be an offer, it has to be an indication that Sam is willingly to enter into the contract with Bob without further negotiations. Yet, the fact of the case is, Bob was freely to choose the model from the lists of model with price list included. Also, it is probable that Sam has a right to change any of the listed equipments price, should circumstances arise. As such, the terms are not final, and no offer has been made at this point. The two parties have not entered into a legally binding agreement.

Who made the offer?

Given the fact of the case, Sam's invitation to treat led Bob to making the offer. According to the Contract law, an Offer is defined as "an expression of willingness to contract on specified terms, made with the intention that it shall be binding as soon as it is accepted by the person to whom it is addressed" (StudyGuide Page 2)

The offer is made when Bob sent his reply through post with the choice of Supreme camera model, on Wednesday. By applying the third person objective test, Bob action shown a clear intention to enter into a contractually bound agreement, as soon as it is accepted by Sam. Bob have made known expressly, his interest in fitting his shop with Sam's security equipments; this contributes to the intention to create legal relationship. Furthermore, two parties have had sufficient time to reconsider about their positions, and Bob had taken the initiative to make a proposal in a written form. It would seem unreasonable to look at the letter any otherwise as an offer to Sam Would Bob send a letter to instruct Sam about his choice of the "Supreme model" for the camera, (given the information he was provided), was he not intended to buy it in the first place? Thus it can be concluded that Bob's reply was a clear offer and it was communicated.

The second issue: does Postal Rule apply?

The second phase of the case falls upon two questions - has there been an acceptance and is the revocation of the offer sufficient?

As given, Sam received Bob's delayed offer on Saturday and emailed him to accept his offer. Firstly, there is a question of whether...
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