Question
THE BUSINESS CONTEXT: For the purpose of entering into a contract, parties may negotiate considerably. Difficulties arise when one party believes that a contract has
THE BUSINESS CONTEXT: For the purpose of entering into a contract, parties may negotiate considerably. Difficulties arise when one party believes that a contract has been concluded while the other party disputes that conclusion.
FACTUAL BACKGROUND: Plaintiff and defendant negotiated extensively for the purchase and sale of real estate by the plaintiff to the defendant. The negotiation this property-known as shortgrove Hall the form of correspondence that the plaintiff/ vendor claims culminated in a contract. The
first legally-important letter from the plaintiff stated:
Thank you for your letter received last week . . . . As you are aware that I paid 25 000 for this property, your offer of 20000 would appear to be at least a little opt or a qu1ck sale I would accept 26000 that my expense may be covered.
In response, the defendant wrote:
I have just recently returned from my winter holiday and, turning this matter over in my mind now, would advise you that I accept your offer.
The plaintiff replied
I thank you for your letter . . . accepting my price of 26 000 for the sale of Shortgrove Hall. I am putting the matter in the hands of my solicitors My wife and l are both pleased that you are purchasing the property.
The defendant denis a contract was formed, asserting that the parties had merely agreed on price.
THE LEGAL QUESTION: Is there a contract between the parties?
RESOLUTION: The court found for theplaintiff. There was a contract for the purchase and sale of Shortgrove Hall. To reach this conclusion the court carefully analyzed the correspondence provided and acknowledged the defendant's argument that agreement on price does not necessarily mean that the parties have reached a full agreement. On these facts, however, a 'contract did exist. As the court concluded: '
The impression conveyed to my mind by these letters, and indeed the plain impression, is that the language used was intended to and did achieve the formation of . .. [a] contract. As I have indicated, in the last letter stress was laid on the phrase "accepting my price [emphasis added] of 26 000 for the sale of Shortgrove Hall." I think, in the context of the letters that preceded that, it is to be read, as I have said, as "accepted my offer [emphasis added] to sell Shortgrove Hall' at that price."
CRITICAL ANALYSIS: Who is the offeror and who is the offeree in this case? Do you agree with the court that a contract was in place? Should courts hold parties to the meaning of the exact words they use, or should words be interpreted in their larger context?
- Is there consideration supporting the University's promise?
- Does this rule concerning performance of a pre-existing legal duty reflect the reasonable expectations of both the parties involved and the broader business community?
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