Speedy Sales Inc. (SS) owned several new office buildings in New Westminster. On October 10, SS sent a letter to Elephant Enterprises Ltd. (EE) offering to sell the lots for $1 million each ($1,000,000 CAD). The letter stated: “This offer is available until October 20, and the offeree must accept by letter mail.”

EE’s owner Ellie Elephant received the letter on October 12. After thinking for a few days, she asked her secretary Jill to draft a letter to SS on October 15, offering to buy 3 of the lots for $975,000 each. Jill placed the letter in the mailbox on October 17.

When Samantha Speedy, owner of SS, received the letter on October 19, she immediately called EE to speak with Ellie. Ellie was not available to speak on the phone, so Samantha left a message with Jill, stating that SS was rejecting the counteroffer, and would not sell the lots for less than $1 million each.

As soon as Ellie came back from lunch, Jill informed her that EE’s counteroffer had been rejected. Ellie asked Jill to write a second letter to SS, offering to accept the original price of $1 million for each of the 3 lots. Jill typed up the letter and put it in the mailbox that afternoon, October 19.

When SS received the letter on October 22, Samantha immediately sent an e-mail back to EE stating, “We regret to inform you that the lots you were interested in have already been sold.” Ellie was disappointed and wondered if Samantha had broken the law by selling to a different buyer.

Ellie decides to contact you, her lawyer, for legal advice.

Explain the position of both parties and discuss any legal issues that apply in this case. Consider the following questions:

Was there a valid contract between SS and EE? Why or why not?

Did EE accept SS’s offer in time before the offer lapsed?

What was the effect of EE’s counteroffer on the original offer?

Did Samantha have the right to sell the lots to another customer, or was she required to sell them to Ellie?

If EE had replied by e-mail instead of letter on October 19, would there have been a valid contract?

Case B

Jun attended a reunion with some old classmates at their friend Imani’s house, five years after they graduated from college together. Jun had a few drinks while talking with Ted, an old friend from his Business Law class.

Ted was excited to show Jun pictures of his boat named Cryptocurrent. Ted said that he had been sailing around the world with it in recent months, but wanted to upgrade to a larger boat, so he was looking for a buyer for Cryptocurrent. His asking price was 1 Bitcoin (BTC). He showed the contract to Jun, who said, “Wow! I’d love to buy it, but I only have one Bitcoin that I’m keeping as a long-term investment.”

Jun was feeling hungry and a bit lightheaded, as he hadn’t had a meal since breakfast, and had only consumed alcohol, so he excused himself to the kitchen. Inside the refrigerator, he found what appeared to be a chocolate brownie. Thinking no one wanted it, he ate the brownie, opened another beer, and returned to his conversation with Ted.

About twenty minutes later, Jun felt like the room was spinning, so decided to lie down on the  couch for a while. Ted said, “You don’t look so good. Imani, get him some water.”

Imani went to the fridge to pour a glass of water for Jun. “Say,” she called out, “did someone eat my brownie? That was medical cannabis, prescribed by my doctor for my chronic pain. I’m only supposed to eat half a piece at once“

Jun woke up the next morning. He couldn’t remember how he had ended up on the couch. All the other guests were gone. Looking on Imani’s table, he was shocked to see a contract for purchase of Ted’s boat, Cryptocurrent, signed by Ted and himself, in exchange for 1.0 BTC. Jun recognized his own signature, but the handwriting looked unusually sloppy.

Jun decides to contact you, his lawyer, for legal advice.

Explain the position of both parties and discuss any legal issues that apply in this case. Consider the following questions:

Is the contract between Jun and Ted legally binding? Why or why not?

Did Ted have any responsibility to Jun because of Jun’s mental state?

Does Jun have the legal right to cancel the contract for the boat if he contacts Ted immediately, and states that he lacked capacity at the time that it was signed?

Or does Ted have the right to enforce the contract, because it was signed by Jun?

Imagine that instead of contacting Ted right away, Jun decides to take Cryptocurrent on a two-week sailing trip to California. Does he have the right to cancel the contract with Ted upon his return, on the basis that he was intoxicated at the time the agreement was made?

Answer rating: 100% (QA)

CASE A Answer No there was no valid contract between SS and EE because when a counteroffer is made by any party the previous offer becomes void and it ... View the full answer