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Contract law

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BUSINESS LAW On 1 January, Kenny writes to Elaine offering to sell Elaine her car for $50,000. On 5 January, Elaine writes back and offers to pay $40,000. On 8 January, Kenny replies in writing that he will take $45,000. On12 January, Elaine writes to Kenny and asks whether the car radio is included in the price. On 15 January, Kenny writes to Elaine and tells her that the car radio is not included. On 19 January, Kenny writes to Elaine and tells her that he has decided not to sell his car. On the same day, Elaine writes to Kenny accepting the offer of 8 January. Is there a contract between the parties? Assume that all letters were posted on the day they were written and delivered following day. For a valid contract to exist there must be offer and acceptance. An offer is a statement of willingness to be bound by the terms of the offer. Kenny's letter construed as an offer to sell car for $50,000. ...read more.


Furthermore Elaine's letter on 5 January is a new offer and will require acceptance in order to form a contract. On 8 January, Kenny replies in writing that he will take $45,000. Kenny is making a fresh offer for himself. On 12 January, Elaine is making a request for information whether the car radio is included, which is not normally considered as a rejection of offer. In the case of Stevenson Jacques & Co v McLean showed that a request for information does not terminate the original offer. In addition, offer made by Kenny on 8 January is still legally binding. On 15 January, Kenny's letter to Elaine is the provision of information as he informed Elaine that the car radio is not included. Still, Kenny's offer on 8 January is valid. However, on 19 January, Kenny is revoking the offer of 8 January by deciding not to sell his car to Elaine. Revocation is an offer withdrawn or revoked by the offeror at any time before it has been accepted and only effective until communicated to the offeree. ...read more.


On the other hand, Kenny's offer was on 8 January and Elaine accepted the offer on 19 January, which is 11 days later for the acceptance of the offer. There is no deadline for the acceptance of the offer and therefore no acceptance must be within reasonable time. In the case of Ramsgate Victoria Hotel Co v Montefiore held that there was no contract as there was no acceptance of the offer within a reasonable time. If no time limit was specified for acceptance therefore 11 days is a reasonable time for Elaine to accept the offer. Elaine's acceptance will be effective and lead to a form of contract. However, if 11 days are deemed unreasonable as business transaction usually takes 5 to 7 days to proceed and therefore Elaine's acceptance is not valid and no contract is binding according to Ramsgate Victoria Hotel Co v Montefiore case. In conclusion, it is arguable for both parties whether to be bound by contract. There is a contract if the acceptance of Elaine is effective before the revocation of offer from Kenny takes place. However, Kenny can argue that no contract exists as offer can lapse through the lapse of time. ...read more.

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