Redd is the owner of an art gallery in Amsterdam. He has what he has always believed was a Rembrandt painting in his gallery. However, the Rembrandt Project has recently added this painting to the list they are currently reviewing, because they are of the opinion it may not be authentic. Learning this, Redd wants to sell the Rembrandt now before any official ruling on its authenticity.

Redd remembered that his colleague, Blathers, was the curator for the Art Gallery of Ontario (AGO). Blathers mentioned to him at a show last year that the AGO was very interested in acquiring a Rembrandt for its collection. Redd decided to take Blathers up on this offer. He sent Blathers a standard form used by art dealers setting out a sale for the Rembrandt for $2.7m. He sent it to Blathers by fax on Friday, September 27. The form indicates that Redd will hold the painting until a response is received by October 27. Blathers saw the fax on Monday, September 30 and became exhilarated. He filled out the portions of the form left blank for him and agreed to have the AGO purchase the Rembrandt from Redd for $2.7m. Blathers sent the form back to Redd by mail on October 1. Unfortunately, he made a mistake with one number in the address line, so it ended up being sent to another address. The recipient threw it in the garbage. Redd never received Blathers' mail.

Very happy about the purchase, Blathers left for a three week holiday on October 2. Not hearing back from Blathers, Redd figured he was not interested, so on October 7 he put an ad in a special art dealers journal stating: "For sale, one Rembrandt painting. Price: $2.7million." While on holiday, Blathers meets up with his sister, Celeste, who is also a museum curator of sorts. Celeste tells Blathers that she saw an ad placed by Redd in the Museum Curator's Quarterly offering his Rembrandt painting for sale. Blathers was upset, and telephoned Redd. He left Redd a voicemail on October 12 stating that he mailed back the form on October 1 indicating his willingness to buy the painting, which he expected him to honour.

In the meantime, on October 10, the Rembrandt Project got back to Redd with their verdict on the painting's authenticity - they deemed that the painting was not an authentic Rembrandt. Learning of this, Redd became worried that the reputation of his gallery would suffer if he kept the painting, but he also could not afford to sell the painting for less than the cost of a true Rembrandt. 2 days later, Redd picked up Blathers' message that the form had become lost in the mail, and that he was still interested in buying the painting from him. Redd felt relieved, and closed the deal with Blathers, selling him the alleged Rembrandt painting for $2.7 million.

A couple of months later, a member of the board of the Rembrandt Project is visiting the AGO. He spots the inauthentic Rembrandt on the wall, and informs Blathers at once. Blathers is devastated, and wants to sue Redd for selling him an inauthentic painting.

QUESTION

In your answer, please respond to and discuss the following:

• Identify the elements of the contract that were present in the contract's formation
• Explain any issues with the communication of the offer or its acceptance
• Explain what Redd did wrong in the context of contract law, and what Blathers options for recovery would be