Monday, September 27, 2010

Work it, work it...

So I've been hard at work gentle readers over the last few weeks on the LLB. Actually, I had a good session the other night with some other students on contract law of all things. Have a look at the attached and let me know your thoughts:

On Monday, Albert inspected Betty’s car at her house in Woking and offered to pay £10,000 for it. Betty wanted £12,000. Later in the day, Betty wrote to Albert and stated that she would take £11,000. The letter was received by Albert at his home on Tuesday morning. At 4.00 pm on Tuesday afternoon, Albert at his office in London wrote a letter to Betty accepting her offer. On his way to post the letter Albert met Cuthbert who told him, ‘I gather that Betty has finally sold her car.’ Betty had, indeed, sold the car. Albert posted his letter and, upon arriving home at Woking, discovered a message on his answer phone from Betty. The message had been left at 3.00 pm; Betty had stated, ‘I withdraw my offer.’ Albert bought a similar car for £12,500. Advise Albert.

In the situation above, Albert is £1,500 worse off due to the actions of Betty. The question is whether Betty could reasonably withdraw her offer in the manner in which she did or was there a binding contact between the two of them for Albert to buy Betty’s car for £11,000?

Albert’s case rests upon the strength of the postal rule as first established in Adams v Lindsell (1818) and Household Fire Insurance v Grant (1879). Under this exceptional rule, acceptance of an offer is completed when it is posted. This Albert did during the course of Tuesday afternoon sometime after 4pm. As seen in Quenerduaine v Cole (1883), it was reasonable for Albert to rely on the postal means of communication despite its old-fashioned nature, due to the previous letter which Betty wrote to him offering to sell her car. Thus the use of the post was reasonably contemplated by the parties.

Albert will have to contend against Betty’s claim that he knew the car was sold because he was informed by Cuthbert. While Albert did hear from Cuthbert that the car might have already been sold, this was no more than hearsay as there is no supposition that Cuthbert was reliable and authorized to communicate for Betty as set out in Dickinson v Dodds (1876). In advising Albert it should be clearly necessary to review with him if Cuthbert ever said that he was acting for Betty by telling him this information. If not, it could be reasonably disregarded.

Perhaps the most difficult point for Albert to contend with is that there is little clarity on what to make of Betty’s withdrawal of her offer on a voice mail message at 3pm. Albert would need to reasonably argue that voice mail does not fall under the postal rule exception to communication, thus it is valid when received. As
Albert’s posting of the acceptance to Betty’s offer was prior to receiving the notice of her revocation then the postal rule should apply and Albert should have a reasonable claim for £1,500 compensation.


  1. So can Cuthbert not be used as a reliable source? Meaning that his meeting with Eric has no relevance? What advice would you give to Betty?

  2. Thanks for your comment, we had a good discussion about this very point in our study group. In Dickinson v Dodds (1876) the news was passed so that it was a virtual certainty that the buyer knew the item was no longer for sale. From what Cuthbert says and the lack of relevant details about him and how he obtained this information it is hard to make the claim that he is a reliable source. Also as per the study guide we use and also the summaries of that case I have seen, the information must come from a reliable source for it to have relevance to Eric. Thinking of it on the 'flip side' - if Cuthbert is just a misinformed passerby and Eric acts upon his information, Eric could be at a greater risk if he were to say "oh well" and toss the letter away.

    Obviously what makes Eric's case is what breaks Betty's. So in advising Betty she would need to rely on the strength of Cuthbert's words and that this notice had an effect similar to that in Dickinson v Dodds (1876). Also she would need to argue that in this age of instant communication she left a notice that the offer was withdrawn prior to Eric posting his letter.

    Hope that helps and thanks for the feedback. Your ideas?

  3. it thare any counter offer?

  4. Alexandra purchases a hotel in Devon. It requires renovation and she employs
    Bertram to install a new kitchen for £50,000. She plans to reopen the hotel in
    time for the summer trade and so stipulates in the contract that the kitchen must
    be completed by the end of March. By the end of January, it becomes clear that
    the work will not be completed on time. Alexandra promises to pay Bertram a
    further £6,000 which will enable him to hire extra staff to ensure completion on
    the due date. Her husband, Charles, concerned at the pressure being placed on
    his wife, promises Bertram a further £1,000 ‘bonus’ if he completes on time.
    Meanwhile, Alexandra owes money to the decorators, Décor Ltd. She speaks to
    their managing director in January and promises to pay a further £700 of the
    £1,000 due immediately (the money is due at the end of March), provided that
    this extinguishes the debt. The managing director agrees and Alexandra pays the
    Bertram completes the work at the end of March, but Alexandra and Charles now
    refuse to pay him more than the £50,000 due under the contract. Alexandra also
    receives a demand for £300 from Décor Ltd at the end of March.
    Advise the parties. ( can help me? =()

  5. Hello Questor,
    If you don't mind some helpful clearly have a good grasp of the issues but your answer is sort of lacking structure.

    My tutor has advised me to adopt a basic structure whenever attempting Contract problem Qs.

    First off : Identify the issue straight away.
    So here it would be : The issue here is whether A and B have contracted to purchase B's car, if so at what price ?

    - Briefly define what a contract is : A contract is formed when parties voluntarily assume liabilities towards eachother. One of the primary requirements of any contract is a definite offer followed by a definite acceptance

    - The examiner's reports almost always mention the cases of Storer v Manchester CC and Gibson V Manchester CC to illustrate the nature of a offer. I think its a good idea to incoporate some of the relevant facts of those cases to show how an offer needs to be definite and final

    - Do not jump straight ahead to the postal rule, first determine if there has been a definite offer. I know it may seem obvious but you do get marks for discussion! So in this case you would start off by determining whether A's offer to purchase for $10,000 is a valid offer. You must relate to the fact of the question to show why this is an offer (Assuming you think it is). E.g. A has already inspected the car and presumably found it to his satisfaction and thus he clearly intends to be bound to purchase the car if B accepts etc.

    Then you must discuss if B's comment as to $12,000 is a supply of information or a counter offer....

    Okay I'm going to stop there in case you think I'm being a bit obnoxious telling you what to do lol But this is how my tutor advised me and I thought I'd share.

  6. Hi! Thanks a million for your comment, really helpful not only to me but for others who read the blog (if any!). I can't agree with you more. Since writing this I have had a lot more experience in writing out practice essays and I totally agree. Structure is very important and I jumped too quickly into this by far, also I did not value how important it is to lay a foundation for the issues which are to be discussed. Once again thanks and I would value any feedback you have.

  7. You're welcome! Glad I could be of some help.
    Hope revision's going well :)