Billy's Buildings Ltd. owned several cottage lots on Saltspring Island, and on October 10, sent a letter to Carrie's Construction Co. offering to sell the lots for $350,000.Carrie's Construction Co. sent a reply by return mail on October 13 offering to buy the lots for $280,000.

Billy's Buildings Ltd. did not respond immediately, but a week later, on October 20, Billy Barnes, the President ofBilly's BuildingsLtd., met Carrie Cartwright, the President of Carrie's Construction Co. at a charity dinner, at which time Carrie indicated that her company was still interested in the purchase of the cottage lots, and enquired if Billy would be willing to reduce the price of the lots. Billy stated that he was unwilling to sell the lots for less than $350,000.

On October 23, Carrie's Construction Co. sent a letter toBilly's BuildingsLtd., stating acceptance of the offer to sell the cottage lots for $350,000. Due to a delay in the delivery of the mail, the letter was not received at Billy's office until October 28.

In the meantime, Billy's BuildingsLtd. had accepted an offer from Erik's Enterprises Inc. to purchase the lots on October 26. When Carrie heard about this, she started legal proceedings against Billy's Builders for breach of the contract Carrie alleged existed between the two companies.