CONTRACT TUTORIAL QUESTION

1. (a) On February 7, Derrick posted two separate letters to Bert and Andy and informed them that he was selling his 50 inches Surround Sound television set for $300,000. He stated that they should respond by post and that the offer would remain open until the 14th of February. Both persons received the letters in the post on the following day.

Andy on receiving the letter thought it was a good price. He immediately called Derrick stating that he was interested in buying the television set but he wanted to see it first. However, he was too busy with work and on February 10, he posted a cheque for $500,000.00 to Derrick. He also informed him in the letter that he would come and collect the television set on February 16.

Immediately Bert received the letter, he telephoned Derrick, but he was not around to take the call, so he left a message on Derrick's answering machine stating that in his opinion the television set was overpriced and he would pay $200,000 for it. Derrick retrieved the message on February 11 from his answering machine. He received a call one hour later from Bert stating that he would purchase the television set for the $300,000 as he just realized that it had surround sound and picture in picture. Derrick told him that he would not sell it to him. Bert is insiting that he has made a valid acceptance and will sue him.

Meanwhile not hearing from Andy on the 12th day of February, Derrick advertised the television set for sale in the newspaper to see if he could get a higher price.

Derrick was visited by John on the 13th February, who responded to the Ad. John told him that he was the famous actor "Johnny B", showed him his identification and gave him a cheque for $400,000 and left with the television set. On lodging the cheque, later that day, Derrick discovered that there was no such account and that Johnny B was a wanted crook. Derrick was embarrassed and did not report the matter to the police. The next day, after getting a tip from one of his friends who he had told what had happened, he went to a pawn shop located near his home and saw the television set on a stand. The owner of the Pawn shop, Paul, told him that on the 13th February, a man came in and sold it to him for $200,000.

Derrick received the letter with the cheque from Andy on the 15th February and Andy visited him as he stated he would, on February 16. He told Andy that he did not have a valid acceptance as he should have received the letter by the 14th February. Andy is quite upset and has informed Derrick that he will sue him.

Derrick also informed you that he sold a 17 year old University student Crissy a12 inch Samsung notebook for $50,000.00 on credit of $10,000 per month but she has only made one payment. Her best friend Mary who had accompanied her to Derrick's store did mention to Derrick that Chrissy had a brand new laptop and a one year old notebook so she did not need it, however he decided to still sell her.

Derrick wants to know if he can sue Paul to recover the television set and if Andy or Bert will be successful if they sue him. He also wants to recover the outstanding payments from Chrissy as these are all overdue.

Advise Derrick on all issues arising.

(2) Michelle decided to treat herself for her birthday and checked into "The Ritzzy hotel". She signed a contract which she never read, with one of the terms being that the hotel will not be responsible for any car that has been parked in the hotel's parking lot which is damaged or stolen.

Upon arriving in the room, Michelle saw a sign on the bedroom wall informing her that the hotel is not liable for any items missing or stolen from the room. All valuables were to be taken by guests when leaving the room..

Michelle left her genuine pearls in the room and went to dinner. Upon her return to the room her pearl set was gone. The hotel was informed by Michelle of the theft, however they denied liability based on the sign in her room. Michelle decided to leave the hotel and was quite outraged when she went to the car park and saw that her tyres were all slashed.

The hotel is also stating that it is not liable for the slashed tyres. Michelle wants to sue them to recover the costs for her pearls and the slashed tyres.

Advise Michelle.