3. Contract Formation

Required:

Discuss Henry's legal relationship and obligations to each of the other parties. Refer to the cases in the textbook and lecture notes showing their relevance to these facts

On 1 February Henry, a retired accountant, placed the following advertisement in his local paper:

For Sale- Ford Mustang Coupe SHELBY GT3506SPD MANUAL a brilliant car, $120,000, offers please.

On 2 February, Alpha wrote to Henry as follows:

"I have seen your lovely car and would like to buy it. I am seeing my solicitor this afternoon as he is holding my money on trust and will get him to send the money as soon as possible."

On 3 February, Beta telephoned Henry and said:

"I am very interested in your Volvo, but I don't know whether or not I can get a small loan. I will see my bank manager in a couple of days and if I get the money, I will buy it."

Henry replied to Beta:

"Thanks for that. I expect that I will hear from you later."

On 5 February, Delta, who had already inspected the car, delivered a letter, which said:

"I would like to buy your car, but I have spoken to a Jaguar dealer who says the market value is no more than $100,000 which is what I now offer."

Henry immediately writes a reply stating:

"I cannot agree. My own dealer had told me that it is worth $120,000 so I am sticking to that price."

On 12 February, Henry received simultaneous letters as follows:

From Alpha"My solicitor has now given me the money from the Trust fund.I will collect the car and give you a cheque tomorrow for $120,000."

From Beta"My bank manager has approved a loan. I will bring you a cheque for $120,000 and collect the car tomorrow."

From Delta"You drive a hard bargain, but I accept your offer at $120,000. I cannot bring you $120,000 in cash until tomorrow. I hope that the car is ready then."