Question

In: Operations Management

On January 2, 2020, Seller sends Buyer a letter offering to sell an Andy Warhol painting...

On January 2, 2020, Seller sends Buyer a letter offering to sell an Andy Warhol painting (described in the letter) for $ 500,000. According to the letter, the seller must receive buyer’s acceptance no later than January 10, 2020. On January 6th, buyer (who wants the Warhol painting for his personal collection) decides to accept the offer and prepares a letter which states, "I accept your January 2, 2020 offer to sell the rare postage stamp (as described in the offer) for $500,000". Buyer leaves the office at noon for lunch. On the way, he stops at the post office to mail the letter.

Meanwhile, on the morning of January 6th, someone else offers Seller $ 600,000 for the painting. Before Seller accepts this offer, he needs to revoke the original offer that he had made to Buyer. Therefore, Seller calls Buyer’s office at 12:15 p.m. to revoke his offer. Seller speaks to Buyer’s secretary - the following exchange takes place:

Secretary: Buyer is out to lunch - he should be back at 1:00 p.m.

Seller: “Have him call me. I’m revoking my offer to sell the Andy Warhol painting”.

Secretary leaves Buyer a phone message slip that reads “Seller called. He wants you to return the call”. Secretary then goes out to lunch. When Buyer returns from lunch, he sees the message and calls Seller - the following exchange takes place:

Buyer: Funny you should call. I just got back from the post office. I just mailed you a letter. I am accepting your offer for the Andy Warhol painting.

Seller: Actually, the offer is revoked. In fact, I told secretary “I’m revoking my offer to sell the Andy Warhol painting”.

The January 6th letter was delivered to Seller on January 8, 2020. Seller now refuses to transfer the painting. Buyer sues. RESULT?

Answer in this format :

  1. Identification of the precise legal issue(s) presented by the facts :

  2. Statement of the relevant legal principles/rules related to the issues

    identified :

Solutions

Expert Solution

The legal issue -

Does Buyer and seller have valid contract?

Can seller revoke the offer made to Buyer?

Can buyer sue for breach of contract?

The fact that Seller created a offer on On January 2, 2020 to sell an Andy Warhol painting for consideration of $ 500,000. The offer is valid till January 10, 2020. Buyer accept the offer and post the letter at Noon that is 12 o clock. Seller calls Buyer’s office at 12:15 p.m. to revoke his offer.

Legal principles that Both have valid contract involves That Valid contact must have offer and acceptance which was present in this case. seller offer to sell the painting and Buyer accepted the offer by sending the letter on 6th jan 2020 that is before 10th jan 2020. The consideration is also there that $500000 for the painting and both parties are competent to make contract so both have valid contract between them.

In case of seller can revoke the offer then i would say no, Seller can not revoke offer because of Mail box legal rule in which an offer is accepted at the time when acceptance is communicated (whether by mail e-mail, etc). seller can only revoke offer if acceptance is not done.

Buyer send his acceptance on noon while seller calls his office on 12 15 pm means acceptance is communicated before revokation of offer.

so Buyer can sue for breach of contract.


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