Question

In: Economics

Kamalpreet and Disha are sisters. On 1st February, Kamalpreet meets her sister for a drink and...


Kamalpreet and Disha are sisters. On 1st February, Kamalpreet meets her sister for a drink and tells her she is looking for a new sports car. Disha replies that she wants to sell her red Ferrari as there is now a better model available and that she is happy to sell it to her sister ‘on a business basis’. Disha says she wants about $100,000 for it. That evening, Kamalpreet sends an email to Disha saying, ‘I accept your offer to sell the car for $100,000 and will transfer the money in a few days.’ On 3rd February, Disha sends Kamalpreet an email that says: ‘Don't be stupid I wouldn’t sell the car for that; I want $125,000 for it. To avoid any further misunderstanding, do not email me again unless you do not want the car at this price.’ Kamalpreet, was so annoyed on reading the first sentence of Disha’s email that she deleted it without reading further and did not reply. Three weeks later Disha rang Kamalpreet and demanded $125,000, offering to deliver the car. Required:
a. Advise Kamalpreet on your legal opinion
b. How, if at all, would your answer differ if upon reading Disha’s email on 3rd February, Kamalpreet decided to purchase the car for $125,000 and Disha now refuses to deliver it?

Solutions

Expert Solution

Ans a=

· The ‘counteroffer’ is a response provided to an offer, implying that the original offer was disregarded & substituted by another one.

  • Counteroffers provide the original offerer 3 options- accept it/ reject it/ make another offer & carry on with the negotiations.
  • Parties aren’t obligated by a contract till one side accepts the other side’s offer.
  • Counteroffers are normal in corporate negotiations such as realty deals, car deals, & employment agreements.

Ans b=A business contract creates particular obligations which are to be fulfilled by the sides who entered into the agreement. Legally, one side's failure to meet any of its contractual obligations is termed as a ‘breach’ of the agreement. Depending upon the specifics, a violation can happen when a side fails to perform as per the agreed time/ doesn’t perform as per the terms of the agreement/ doesn’t perform at all. Accordingly, a violation of contract will normally be categorized as either a ‘material breach’ / an ‘immaterial breach’. When a violation of agreement happens or is alleged, one or both of the sides may wish to have the pact enforced on its terms, or may want to recover for any financial damage caused by the alleged violation.

If a conflict over a contract crops up & informal attempts to a resolution are unsuccessful, the most usual next step is a court case.


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