Question

THEORY TO PRACTICE

On Monday, the owner of Quick Oil Change (“Quick”) has a breakfast meeting with the owner of Digital Solutions (“DS”) to discuss DS’s proposal to provide digital consulting services for Quick over a period of two years. The parties discuss price, services to be provided, hardware and software to be purchased, and the timeline to implement the services. When Quick asks DS to lower the price, DS takes out an index card and writes down the following:

5 tablet computers (inc. software): $1,500

2 years of Gold Package of Services: $5,000 (10% discount)

Quick reads the card and says, “Great. I like this price much better. Let’s get started.” The two shake hands and leave the meeting. On Tuesday, Quick receives the following e-mail from the owner of DS:

Due to our commitment to a larger customer, I must revoke my offer of yesterday.

Did DS make a valid offer on Monday? Why or why not? Name a case to support your answer.

Were the terms definite enough to constitute an offer? If not, what term was missing?

Was DS’s revocation on Tuesday an effective termination of its Monday offer? Explain your answer.

Page 194Assume that a contract exists between the parties. What source of law governs the contract? Why?

Assume that a contract exists between the parties but that the owner of Quick was under the influence of a mind-altering prescription drug at the Monday meeting, although she was acting and speaking in an ordinary manner. Will the owner of Quick be successful in a claim that the contract is void due to her incapacity? Name a case to support your answer.

Answer 1

DS did not make a valid offer on Monday because for the offer to be valid three conditions are to be met i.e. Communicated, Committed and Definite Terms.

DS met the first criteria of Communication by communicating in writing its end of the deal and the various prices at which it is willing to strike the deal. The communication clearly stated the constituents of the transactions. This commnuication was also accepted by Quick. Now, the offer should contain the sense of committment which is seen lacking in this offer. The statements

5 tablet computers (inc. software): $1,500

2 years of Gold Package of Services: $5,000 (10% discount)

do not reflect any sort of binding nature by the offerer which makes it obligated to carry out the deal if the other party accepts the bargain. Hence, the offer was not valid.

As per the third element of Definite Terms we do not find any specific words which clear out the terms of the deal for example, a clause on the offer such as “DS will offer Quick 5 tablet computers (inc. software) for $1,500 and 2 years of Gold Package of Services for $5,000 at 10% discount. Quick must communicate the acceptance or rejection of this offer in writing before 2 p.m. on Tuesday, otherwise the offer will stand terminated. The absence of such definite terms make it an invalid offer.

The revocation on Tuesday was an effective termination because the terms of the contract did not specify any clause under which the offer can be terminated nor was the offer a valid contract because of unavailabilty of binding or definite clauses. Hence, DS was not legally binding to serve the contract.