Ms. Mini advertised her sailboat for sale at HK$3 million in a local newspaper.
ID: 384221 • Letter: M
Question
Ms. Mini advertised her sailboat for sale at HK$3 million in a local newspaper. She received only one telephone call from Mr. Micky showing his interest in the boat. Then they arranged to meet each other and to let Mr. Micky inspect the boat. Having inspected the boat, Micky said that he would like to buy it but needed time to arrange payment. Before they departed, they shook hands and exchanged business cards. Two days later, Micky phoned Mini saying that he could only take the sailboat at HK$2.5 million. Mini did not reply. Mini was not satisfied with the price of HK$2.5 million but she was not sure whether she and Micky were already contractually bound or not. Required: (a) Advise Ms. Mini whether there was a valid binding contract (b) Would your answer be different if after inspection of the boat, Micky made a statement as (10 marks) follows: “I will take the boat at HK$3 million but I can only pay by cheque." ? (10 marks)
Explanation / Answer
a. From the above case study it is understood that there has been no contract between Mini and Micky. A contract is said to be vaild if there is: 1. an offer 2. an acceptance 3. an intention to create a legal relationship 4. a consideration. In this case Mini will accept the offer only if Micky is ready to pay her $3 million. Since micky was unable to arrange for the money the contract is considered to be void. It is also importanat to note offeror cannot take silence as a form of acceptance.
b. There is no contract unless and until the offer is accepted by the person to whom the offer is addressed. Under the second situation the contract is void as there has been no acceptance of the contract from Mini.
In both the cases micky has replied to an offer but it is not initself a offer till mini accepts it.
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