In the case at hand, there was a valid contract and ABCD should honor the contract to sell the piece of land to WXYZ at $70 million. A valid contract is one that is binding to the parties and enforceable in a court of law (Collins, 2008). For a contract to be valid, there has to be an offer and acceptance (Collins, 2008). An offer implies the readiness to contract on the given terms, with the intention that, if accepted will lead to an obligatory agreement (Collins, 2008). In our case, there was an offer that was made by WXYZ CEO for the purchase of a 20 acre piece of waterfront land in Florida Keys. The CEO intended to buy the piece of land for $50 million, but the ABCD CEO gave a counter offer of $70 million. The counteroffer made by ABCD was not entirely an acceptance, but proposed new offer to the contract. The acceptance of this contract occurred by the implied actions of ABCD to accept the $10,000 check from WXYZ.
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The acceptance of an offer is not, in many cases, communicated through words, but by the implied actions (Chirelstein, 2013). Pursuant to Carlill v. Carbolic Smoke Ball Company (1983), the acceptance of the $10,000 check from WXYZ constituted an acceptance of the contract and this meant that they would have to wait for the 30 days before they could sell the piece of land to another buyer. By having accepted to hold the piece of land for 30 days as ABCD’s CEO discussed the matter with the board members, WXYZ was obligated to hold the land and could not sell it before the days were over (Collins, 2008).
Therefore, WXYZ cannot change any of the terms of the contract. A change of the terms of the earlier contract would imply that the contract had been breached (Chirelstein, 2013). By bringing the offer to sell the land at $70 million off the table was a breach of the earlier contract and the counter offer cannot be acknowledged in a court of law. In reference to Erollope and Colls Ltd. V. Atomic Power Construction Ltd. (1963), the counter offer to sell the land at $70 million was a new contract offer to WXYZ and became binding after the implied action of accepting the check (Collins, 2008). Therefore, ABCD’s new offer to sell the land to WXYZ at $90 million was not part of the original contract and was a breach of the contract to sell the land to billionaire Richie Moneymaker before the expiration of the 30 day period given to WXYZ.
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Notably, the sale of the piece of land to Richie Moneymaker was null and void. WXYZ’s action to decline ABCD’s new counter offer to sell the land for $90 million was appropriate as this introduced new terms to the contract. In this regard, ABCD should honor its contract with WXYZ to sell the piece of land for $70 million (Chirelstein, 2013). The sale of the piece of land to a new buyer is void and is not enforceable in a court of law.
- Chirelstein, M. A. (2013). Concepts and case analysis in the law of contracts. St. Paul, MN: Foundation Press.
- Collins, H. (2008). The law of contract. Cambridge: Cambridge University Press.