Question

Mr Choden also collects Colleen McCahon paintings as an investment. He happens to meet his niece, Mere, at an art exhibition. Mere is thinking of selling one of her Colleen McCahon paintings and says to Mr Choden: "I want to sell my painting by Colleen McCahon. I think it must be worth at least $35,000."

Mr Choden says he’ll think about it and next day Mere gets a message from Mr Choden saying: "I accept your offer to sell your painting for $35,000."

Mere consults a dealer about the painting she wants to sell and then calls another collector Ira who has previously expressed an interest in buying the painting and says: "I'm selling that painting you’ve always wanted, you know, the Colleen McCahon self-portrait. It's yours for $40,000."

Ira says: "I will pay $35,000."

Mere replies: "I'll have to look for another buyer then."

Later Ira talks to a friend who will lend her the extra $5,000, so Ira quickly rings Mere and says: "I accept your offer to sell the Colleen McCahon painting for $40,000." Mere says nothing.

Mr Choden hears of this and rings Mere to remind her that he has already bought the painting.

QUESTION TWO: (15 marks. 540 words maximum)

Discuss whether any contract has been formed between Mr Choden and Mere and/or Ira and Mere.

Answer 1

In this case no contract has been formed between Mr. Choden and Mere. However there is a contract which has been formed between Ira and Mere.

The basic elements that are required for a contract to be legally enforceable are mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity and legality. Let us first analyze the case between Mr. Choden and Mere. In this case Mere had stated that she wants to sell her painting by Colleen McCahon. She did not state at what price she wanted to sell the painting but said that the painting must be worth at least $35,000. It should be noted that Mere did not specifically made an offer to Mr. Choden as she never said I want to sell “you” this painting. As per legal angle of contract law a contract always starts with an offer. Law defines offer as an expression of a willingness to enter into a contract on certain terms. An offer has to be firm and should not be ambiguous or vague in any form. Here Mere never made an offer to Mr. Choden. If she would have said I want to sell you this painting for $35,000” then there would have been an offer.

In case of her statement to Ira the situation was different. Here her statement was “It's yours for $40,000." Here Mere has specifically offered to sell the painting to Ira for a consideration of $40,000 and when Ira rings Mere she is unconditionally agreeing to all the terms of the offer. We can say that there is “meeting of the minds” here as both Ira and Mere have a clear understanding of the situation.