Question

1. On August 1, Ralph, the owner of a towing company, sends a letter to Blanch, the owner of a used car lot. In the letter, which was signed by Ralph, he offered to sell Blanch 4 specific used cars for $4,000. He also stated, “I will keep this offer open for you until August 15. Please let me know what you decide.”

On August 5, another used car lot owner saw the 4 cars on Ralph’s impound lot and offered him $5,000 cash on the spot. Ralph sold the cars to the other car lot owner. He then emailed Blanch and said, “I’m sorry, the cars are no longer available as I have sold them to someone else.” Blanch received the email but did not respond to it.

On August 10, Blanch mailed a letter to Ralph, which said, “Ralph, I have decided to accept your August 1 offer and purchase the 4 specific used cars. I will come by your lot on August 20 to pick them up and I will bring you payment at that time.” Due to weather problems that affected the mail, Ralph did not receive Blanch’s letter until August 16.

When Blanch went to Ralph’s lot on August 20 to pay for and pick up the cars, Ralph told her that they had already been sold to someone else. Blanch sued Ralph for breach of contract. Discuss, explaining the significance of each communication and action. If Blanch wins the case, what remedies area available to her?

Answer 1

Significance of each communication-

1. Ralph wrote to Blanch offering 4 used cars at $4000 each and kept the offer valid till August 15. He should have honored the communication and could have waited till 15.

2.When Ralf sold the cars to someone else,he communicated the same to Blanch via mail. But Blanch didn't reply immediately, he might be evaluating legal grounds to sue Ralf.

3. Blanch communicated Ralf on August 10 regarding acceptance of the offer. Ideally, Ralf could have immediately replied that cars are no longer available but due to poor climatic conditions he didn't receive the mail. There may be chances that Ralf would have received the mail but he wouldn't have replied intentionally as he had already sold to someone else.

If Blanch wins the case she may demand-

(i) Compensation for Reputation loss- On the basis of offer, Blanch would have promised to someone else to sell the cars but now she won't be able to keep her promise which will lead to reputation loss. She can demand compensation for the same.

(ii) Compensation due to Business Loss- Blanch would have planned to sell the cars once she received the same from Ralf. Now, since she has not received the cars, she has to forgo the loss out of this proposed sales. She can demand due compensation for this.

(iii) Compensation due to loss of opportunity- Since Blanch missed the opportunity to own cars, she can demand compensation for the same.