Speedy Sales Inc. (SS) owned several new office buildings in New Westminster. On October 10, SS sent a letter to Elephant Enterprises Ltd. (EE) offering to sell the lots for $1 million each ($1,000,000 CAD). The letter stated: “This offer is available until October 20, and the offeree must accept by letter mail.”

EE’s owner Ellie Elephant received the letter on October 12. After thinking for a few days, she asked her secretary Jill to draft a letter to SS on October 15, offering to buy 3 of the lots for $975,000 each. Jill placed the letter in the mailbox on October 17.

When Samantha Speedy, owner of SS, received the letter on October 19, she immediately called EE to speak with Ellie. Ellie was not available to speak on the phone, so Samantha left a message with Jill, stating that SS was rejecting the counteroffer, and would not sell the lots for less than $1 million each.

As soon as Ellie came back from lunch, Jill informed her that EE’s counteroffer had been rejected. Ellie asked Jill to write a second letter to SS, offering to accept the original price of $1 million for each of the 3 lots. Jill typed up the letter and put it in the mailbox that afternoon, October 19.

When SS received the letter on October 22, Samantha immediately sent an e-mail back to EE stating, “We regret to inform you that the lots you were interested in have already been sold.” Ellie was disappointed and wondered if Samantha had broken the law by selling to a different buyer.

Ellie decides to contact you, her lawyer, for legal advice.

Explain the position of both parties and discuss any legal issues that apply in this case. Consider the following questions:

• Was there a valid contract between SS and EE? Why or why not?
• Did EE accept SS’s offer in time before the offer lapsed?
• What was the effect of EE’s counteroffer on the original offer?
• Did Samantha have the right to sell the lots to another customer, or was she required to sell them to Ellie?
• If EE had replied by e-mail instead of letter on October 19, would there have been a valid contract?