Question

Svartalfheim manufactures forges. Brokkr&Sindri, maker of fine hammers, had decided to purchase new forges. Eitri, a representative of Svartalfheim, met with Thor, the president of Brokkr&Sindri, to describe the advantages of Svartalfheim’s new forges. Eitri also drew rough plans of the alterations that would be required in the Brokkr&Sindri manufacturing hall, Asgard, to accommodate the new forges, including additional floor space and new electrical installations, and left the plans with Thor.

On January 21, Thor received a letter signed by Loki, a member of Svartalfheim’s sales staff, offering to sell the required number of forges at a cost of $2.4 million. The offer contained provisions relating to the delivery schedule, warranties, and payment terms, but did not specify a particular mode of acceptance of the offer. Thor immediately decided to accept the offer, and telephoned Svartalfheim’s office. Loki was out of town, and Thor left the following message: “Looks good. I’m sold. Call me when you get back so we can discuss details.”

Thor next telephoned Nidavellir and rejected an outstanding offer by Nidavellir to sell forges to Brokkr&Sindri similar to those offered by Svartalfheim. Using the rough plans drawn by Eitri, Boss also directed that work begin on the necessary manufacturing hall renovations. By January 24, a wall had been demolished in the manufacturing hall and a contract had been signed for the new electrical installations.

On January 25, the President of the United States announced a ban on imports of foreign computerized heavy equipment. This removed from the American market a foreign manufacturer that had been the only competitor of Svartalfheim and Nidavellir. That afternoon, Thor received a telegram from Svartalfheim stating, “All outstanding offers are withdrawn.” In a subsequent telephone conversation, Loki told Thor that Svartalfheim would not deliver the forges for less than $2.9 million. A telephone call by Thor to Nidavellir revealed that Nidavellir’s entire output had been sold to another buyer.

Was Svartalfheim obligated to sell the forges to Brokkr&Sindri for $2.4 million? Discuss.

Assume Svartalfheim was so obligated. What are Brokkr&Sindri’s rights and remedies against Svartalfheim? Discuss

Answer 1

The question to be discussed in this regard is the enforceability of the contract in a court of law due to the mode of acceptance of the offer. Svartalfheim had offered to sell the forges to Brokkr&Sindri for $2. 4 million and Brokkr&Sindri had given an oral acceptance. Oral acceptance does count as an accetance given the following conditions are fulfilled:)a Offer b) Acceptance c) Consideration 4) Intention to create legal relations 5) Capacity to contract

In this case, all conditions are fulfilled. Further, Svartalfheim did not specify any specific mode of acceptance of offer. Thus, the oral acceptance is valid and Svartalfheim is obligated to sell the forges to Brokkr&Sindri for $2.4 mn.

The rights and remedies available with Brokkr&Sindri against Svartalfheim are mentioned below:

1) The offer specified conditions for delivery schedule, warranties and payment terms. Thus, if the forges are not delivered within a specific time as per the delivery schedule, Brokkr & Sindri can sue Svartalfheim for breach of contract and claim damages.

2) Further, Brokker& Sindri has spent consdirable amount of money for hall renovations and electrical installations as per the rough plans drawn by Eitri. Brokkr & Sindri can also claim the compensation for that.