Case of "Who Owns the Rug?"

George Oldman, a Toronto antiquerug dealer, advertises in the January issue of the Rug

Dealer's Rag magazine:

For sale: 150yearold Sultanabad Persian. 2.5 m x 4 m. Exceptional quality.

Phone (416) 5562345. FAX (516) 5562346

A colour photo of the rug accompanies the ad.

Dr. Patricia Lee, a Saskatoon dermatologist who collects antique rugs, has just leased

new medical office space and is interested in something unique for her office. She

telephones Oldman long distance in January to inquire about the rug. In the conversation,

the seller describes the history and qualities of the rug. When discussing price, the

following exchange takes place:

Oldman: I am prepared to sell the rug for $6500. It's one of a kind and really worth it.

Lee: I am familiar with the rug because I have looked at it online and I saw it at your shop

in November when I was in Toronto. I am offering you $6000.

Oldman: That's too low. I can't reduce my asking price.

Lee: Okay. I need to take some time to think about the rug.

Before ending the conversation, Oldham agreed to hold the offer open to her; and they

concluded the phone conversation.

On January 30, Oldman leaves a voicemail message for Lee, saying "Are you still

interested in the rug? I have had someone express interest. Call me, please."

On February 3, Lee decides to buy the rug; as she is away from her office, she does not

have access to her fax equipment. She stops at the Post Office and quickly mails a letter

to Oldman in Toronto, posted at 3 P.M. Lee includes a note that says, "I've decided to

purchase the rug. Enclosed is my cheque for $600 as a deposit, to firm things up."

Earlier that day, and unknown to Lee, Oldman sells the rug at his store in Toronto. He

faxes a message to Lee's office that arrives at 10 A.M., Saskatoon time, saying that the rug is sold and no longer available. Lee does not read this fax until 6 P.M. that evening.

Lee's letter is opened by Oldman in Toronto on February 6; he immediately phones to

give her the news that the rug was sold before her letter arrived. After a heated telephone

conversation, Lee hangs up on Oldman.

She decides to vent her frustration on Twitter. She posts a tweet using her usual Twitter

handle of @docLeeSask which says: The owner of @OldmanRugs is a total scam artist.

He is also really sketchy! Women feel super unsafe in that place. AVOID.

As a result of the tweet, demonstrators set up outside the shop. There is a lot of media

attention.

Having seen the store mentioned in a tweet, Mr. Oldman's sales associate Mille Nial calls

Lee on the phone. Mille tells Lee she should be very careful tweeting about other people.

Mille tells Lee that he knows where Dr. Lee's office is. He says it would be a shame if

something happened to damage her reputation. He says she had better not show her

face anywhere near Oldman Rugs.

The next day, someone calls Lee's office pretending to be from the police. The caller

speaks to Lee's receptionist and explains that Lee is under investigation for illegally

prescribing controlled drugs to herself. Two of Lee's employees quit. Lee's clinic is shut

down for a month due to the staffing shortage.

Answer the following:

1. Was there a contract between Oldman and Lee? Explain, with reference to all four

elements of contract. (Explain when, where, and how a contract did or did not form,

and with whom.) 10 marks2. What legal options does Lee have in tort? (Can she sue anyone? What for? Be sure

to explain any tort that she can rely on, identify her damages, and who she can sue.)

10 marks

3. What legal options does Oldman have in tort? (Can he sue anyone? What for? Be

sure to explain any tort that he can rely on, identify his damages, and who she can

sue.) 10 marks

4. What specific lessons can business people learn from this case study? (Apply legal

principles.) 10 marks.