Contracting...

While I am not taking contracts this year, I am in a study group with a number of people who are so I decided in sympathy to follow along. One of the good things to come of the group is the notion that we will exchange practice essays for feedback. Here is my first, any constructive feedback is more than welcome...

Question 2:
Cyril, a stamp dealer, had a rare Peruvian 5 cent blue for sale. He wrote to Davina, a collector who specialises in Peruvian stamps, asking whether she would be interested in purchasing it. Davina wrote in reply, ‘I am willing to pay £500 for the “blue”; I will consider it mine at that price unless I hear to the contrary from you and will collect it from your shop on Friday next week.’ Advise Davina as to the legal position:
a) if Cyril disregarded Davina’s letter and sold the stamp to Eric for £600
b) if Cyril put the stamp on one side in an envelope marked ‘Sold to Davina’ but Davina decided that she no longer wished to buy it.

Answer:
Question two asks us to advise Davina on her legal position, to do so we must first determine whether a contract exists between the offeree Cyril and the offeror Davina. In this case, Cyril’s letter to Davina may be taken as in invitation to treat. Davina may believe that a contract exists based upon her posted reply in which she states that she is willing to pay £500 for the stamp, however there are a variety of issues which arise from her letter. The first concern is the formation of Davina’s offer - in Felthouse v Bindley (1862) the judges held that the offeror cannot impose an obligation on another to reject one's offer and that without specific acceptance a contract is not formed. Thus when advising Davina on point “a” of the question, she would most likely not have an actionable case in the event she wished to claim she had purchased the stamp and Cyril did not have the right to sell it to Eric for £600. However, the situation in point “b” is more complex. Cyril did not communicate his acceptance of Davina’s offer which is a supporting point in Davina’s favour should she wish to revoke her offer, yet Cyril’s conduct indicated to some degree his acceptance of it. Is Davina bound by her offer? In Carlill v Carbolic Smoke Ball Co. the court held that a unilateral contract existed when one party makes an offer if the other party does something fulfilling the conditions, but the other party need not agree to do that thing. Davina needs to be able rely more strongly on the finding of Felthouse v Bindley that the key element of a contract, that of formal acceptance is of greater weight than Carlill and that this was not in fact a unilateral contract.