Question 1

Cleo wanted to purchase a lot from Patrick to build a house in Waverley, several kilometres northof Orillia. Cleo lives in Orillia and Patrick lives in Waverley.

In May, Cleo went to Waverley and offered Patrick $150,000.00 for the property. Patrick refused the offer. On July 7 Cleo went again to see Patrick, and this time Patrick offered to sell the property for $175,000.00 and said he would hold the offer open for 14 days at that price. They shook hands and Cleo left.

Late in the evening of July 8, another person offered Patrick $200,000.00 for the property. Patrick accepted. The next morning at about l 0:30 a.m., Patrick went to Cleo's home and knocked on the door. No oneanswered and he left a letter stating, "Please take notice thatmyoffer to you of July7 has lapsed.''

Cleo did not see the letter until he crune home for lunch at 12:30 p.m. He was not at home earlier because he had an appointment with his lawyer at 9:30 a.m. At that meeting Cleo had requested that his lawyer write to Patrick as follows: "I run instructed by Cleo to accept your offer of July 7, to sell at the price of $175,000.00. Kindly have the contract prepared and forwarded to me." This letter was handed to a courier at 10:00 a.m. that morning (July 9) and delivered to Patri ck at 2:00

p.m. When Patrick received it, he replied stating that the offer was no longer valid.

Cleo replied that he had a valid option agreement and considered there was now a binding agreement.

Required: Discuss the issues that will be raised by the parties, the applicable legal principles and likely resultof the legal action.

Question 2

Andrew and Erica are friends who are both enrolled in ACTG 2P40. On January 10, Andrew and Erica were discussing the sudden rise in value of shares of GME, a corporation listed on the Toronto Stock Exchange. The shares had risen from $10.00 per share on January 7 to $40.00 per share and were being widely promoted on READ-IT, a stock analysis website. Erica did not have a trading account and asked Andrew if he had any excess shares in his account that he would sell to her. Andrew offered to sell her 100 shares for $40.00 per share. Erica said she would let him know as soon as possible. On January 12, Erica told Andrew that she would accept his offer and delivered a cheque to him for $4,000.00. Andrew refused to accept the cheque since the shares were now trading for $42.00 per share.

Erica commences an action against Andrew claiming that they have a valid contract. One week later the shares dropped to $16.00 per share.

Andrew now agrees that there is a binding contract and sues Erica when she refuses to pay. Erica now claims that there is no contract and that in any event a contract cannot be enforced against her since she is only17 and it was a "friendly" deal.

Required: Discuss the applicable legal principles and advise whether there is anenforceable contract and, if so, on what terms. Does it make a difference whether the value of the shares increasesor decreases?