PRACTICE EXAM BUSINESS LAW On June 1, 2018, JOHN SMITH wrote a letter to WILLIAM

Question

PRACTICE EXAM BUSINESS LAW On June 1, 2018, JOHN SMITH wrote a letter to WILLIAM JONES which said: Would you, by chance, be interested in selling your home to me for 90,000.00" JONES received SMITH'S letter on June 3, 2018. After thinking about it, JONES then wrote a letter to SMITH which said, "I accept your offer to purchase my home for $90,000.00. JONES deposited the letter in the mail at 11:30 a.m. June 5, 2018, and SMITH received this letter on June 7, 2018, at 9:00 a.m.. Meanwhile, SMITH learned of another home comparable to JONES for a much better price. Therefore, on June 3, 2018, SMITH wrote a letter to JONES which stated, "Our deal is off SMITH mailed this letter to JONES at 9:00 a.m. on June 4, 2018, and JONES received this letter at 2:00 p.m. on June 6, 2018. When JONES found out that SMITH was not going to buy his home, he filed suit against SMITH for breach of contract SMITH defends by saying "There never was a contract Who should prevail? Smith or Jones and why? Set forth a legal explanation as the reason that one party should prevail over the other party. ANSWER

Explanation / Answer

A contract is a legally binding agreement between two or more parties wherein one party has promised an obligation and another party accepts that promise and in turn promises to fulfil his part of the obligations that arise on fulfilment of the promise by the first party, subject to terms and conditions as may be mentioned in the contract. The Statute of Frauds expressly states the six categories of contracts that have to be written down and one among those six is contracts for the sale of goods worth $500 or more.(Under U.C.C). Any kind of writing is accepted by the statute provided it satisfies the minimum requirement of a contract, that is, the names and details of the parties, the subject of the contract and the terms and conditions which bind it and make it enforceable, void or terminable. Most importantly it has to be signed by both parties as without acceptance a contract is not enforceable and cannot be said to exist as a contract becomes a contract only on acceptance.

The very essence of a contract necessitates acceptance from the person receiving the offer in a very clear manner. The question in this case is whether acceptance through the post is considered on the date of posting or receipt. Confusion over this led to the creation of the postal rule of acceptance. Therefore it was confirmed that any acceptance is to be considered as contractual on the date it is posted, irrespective of the date of receipt, as the party to the contract has taken a decision and conveyed it in writing, once written and posted it is a sealed contract. According to Adams v Lindsell [1818] and Henthorn v Fraser [1892], the postal rule was stated as quoted “Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as it is posted."

Therefore, in the above case, John Smith will prevail as he withdrew his offer in writing on June 4, 2018, 9 am stating the offer is withdrawn. This happenend before acceptance of offer by William Jones on June 5, 2018 11:30 am. Therefore, the offer was withdrawn before acceptance and no contractual relationship was constituted at any point of time, as the offer became void before acceptance. The contract is essentially void ab initio, to be treated invalid from the outset.

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