Samuel placed an advertisement in the local newspaper that read as follows:

"Racing Bike, has to be seen to be believed.  Absolutely first class, guaranteed to make a you a winner, the latest in racing cycles, 15 gears and ultra light frame.  Unbelievable offer, the first person to offer in excess of $15 000 secures.  Phone 301688".

At 6 p.m. on the morning the advertisement appeared in the newspaper, Graham phoned Samuel and offered him $15 000,01 (fifteen thousand dollars and one cent) and said he would be around to collect the bike at 10 a.m.  Samuel just laughed.

When Graham arrived at 10 a.m. with a bank certified cheque for $15 000.01 he was informed by Samuel that the bike had been sold for $16 000 to James who was coming to collect it at 10:30 a.m.  Graham is insisting that Samuel deliver the bike to him.  Samuel denies that there is an agreement between the parties as he had not accepted Graham's offer.

 

a)            What are the rights of all three parties in this matter?

b)            Would it make any difference to your answer if the price had read $1 500 and Graham as a competitive cyclist ought to have been aware that the real value of the bike could not have been less than $12 000?