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tigerlily16's avatar

Is there a binding contract between Eddie and Wally?

Asked by tigerlily16 (35 points ) March 22nd, 2011

Wally Cleaver has been told by his parents, June and Ward Cleaver, that they will help him buy a computer for college.

July 6, Eddie Haskell sends Wally a letter offering to sell him a computer for $1,500. The letter states that the offer is to remain open until July 20.

July 12, Wally writes Eddie a letter stating, “Your offer appears a little high. I’ll need to get my parents’ approval for the $1,500 offer. In the meantime, I already have their permission to purchase a computer for $1,000 and could buy your computer at that price.”

July 15, June and Ward approve the $1,500 purchase.

July 16, Eddie receives Wally’s letter of July 12.

July 19, Wally sends the following fax at 10:45A.M.: “I accept your offer for $1,500.”

July 20, The day Eddies stated in his July 6 letter to Wally that his offer would terminate

July 21, Because of a malfunction at the telephone switching station, although it appeared that
Wally’s fax was sent and received on July 19, Eddie doesn’t receive it until July 21.

Discuss the legal effect of Wally’s fax sent on July 19 in light of the fact that the fax did not reach Eddie until July 21. Is there a binding contract between Eddie and Wally?

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12 Answers

tigerlily16's avatar

I think in order to make a contract, the offer must be received by Eddie, it was not received. The date July 20th causes the offer to die because he did not receive the fax until the 21st. So there is no binding contract.

At the same time I’m having trouble understanding all this and the mailbox rule or the postal acceptance rule is a term of common law contracts which determines when a contract has been formed where the parties are communicating via the mail. The basic thrust of the rule is that an acceptance of an offer that is sent before a revocation of the offer is received. However, if a communication is sent rejecting the offer, and a later communication is sent accepting the contract, then the first one to be received by the offeror will prevail.

Buttonstc's avatar

Contracts with minor children are not enforcable. Presuming that the actual parties are the same ages as the fictional Wally and Eddie, there is no contract.

flutherother's avatar

You can’t expect it to be a binding contract if only one party is aware of it. Fax is a bit unreliable, the paper can get jammed, it can run out of ink. Wally should have phoned on 15 July and made arrangements to pay for the computer. Or Wally could spend the $1,500 on lawyers fees and forget about the computer.

sarahjane90's avatar

You are right in the realm of the postal rule – albeit complicating it a bit. It is relatively straightforward, in British law. Fax and instantaneous methods of communications however adopt different rules to those of the post. See below.

The postal rule, in the UK, is that an acceptance is valid the moment it is posted. An an offer is valid the moment it is received. (Adams v Lindsell). I am guessing it is similar in the US… as both systems are of common law principles. Also, Wally’s letter to Eddie was not an acceptance but a counter offer. This means that the original offer ends, and it is no longer active. Eddie also has not yet accepted Wally’s counter offer, which is the active offer.

There is nothing in the question which suggests Wally is a minor. Therefore I would suggest to not mention his age. Stick to exactly what you are given in the question. Also remember, nothing in the question is there for nothing. It all has some sort of role of importance which you need to draw on for your discussion. The computer is for college so it is probably safe to assume he is 18 or older.

Essentially, the contract is formed between June and Eddie. Wally is not providing any consideration in this equation, he is simply facilitating the negotiations between his parents and Eddie. Eddie never accepted Wally’s original offer of $1,000. Wally is not providing any consideration to his parents for them purchasing the computer for him, either.

Because Wally was basically communicating on behalf of June and his father, and they accepted Eddie’s offer to sell the computer for $1500 on July 15th, they have accepted his offer.

In my opinion, the faxed acceptance is not valid and will not form a binding contract – “of instantaneous communication… the contract (if any) was made when and where the acceptance was received.” See Brinkibon v Stahag Stahl.

Jaxk's avatar

First of all, fax is not a store and forward system. Consequently a switching malfunction would not create a delay but rather a failure. If however you have used some bastardized ‘store and forward fax system, it could not be considered instantaneous communication but would instead follow the rules of any other mail delivery. The onus would be on Wally to insure it was received.

The offer of $1,000 was not accepted nor rejected and therefore carries no weight. The $1,500 offer was neither rejected nor withdrawn and therefore is valid. When nothing was received on the 20th, the offer expired. No contract was created.

Buttonstc's avatar

@sarahjane

“There is nothing to suggest that Wally is a minor.”

Really?

There is plenty to suggest that BOTH Wally and Eddy are indeed minors.

I’m guessing that you’re British, but have you never heard of or seen reference to “Leave it to Beaver”

The principal character names chosen by the OP to represent this transactional scenario are all members of the (fictional) Cleaver family upon whom the series “Leave it to Beaver” was predicated.

Both Wally and Eddy are definitely minor children. If the OP had intended for all the parties involved to represent adults, I’m assuming they would have chosen different hypothetical names (John Doe, etc.)

If there are NO MINORS involved, then why specifically choose Wally and Eddy (both of whom are children) to represent the PRIMARY parties to the transaction ? Doesn’t make much sense to me.

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tigerlily16's avatar

I’m in a business law class and I need help. Sorry if I offended you. I did most of it on my own but I wasn’t sure if I was doing it right so I wanted other opinions. Thanks.

Jeruba's avatar

@Buttonstc, the command to “Discuss” in a Q is a dead giveaway. Those names are the intructor’s hypotheticals, tongue in cheek, probably without expectation of recognition.

@tigerlily16, we’ll help explain things or point the way to solutions when students are struggling with an assignment, and we’ll comment on their own proposed answers, but we’re not here to do people’s homework for them.

Buttonstc's avatar

@Jeruba

“without expectation of recognition”

I can’t imagine in what world this guy is living if those are his expectations :)

And I’m willing to wager that the age of the principles IS germane to the Q at hand. And I wouldn’t be at all surprised if it’s a red herring for a “gotcha”.

sarahjane90's avatar

@Buttonstc

Maybe it is a reference, but I am quite sure that recognizing some names in order to figure out someones age in this type of question is just NOT going to be relevant or required by the students. My professors constantly use ‘Homer’ and ‘Marge’ does this mean that I need to watch the Simpsons to pass my degree?

In law questions you DO NOT ASSUME. You work with the information you are given. You may discuss possibilities, by saying IF this person IS in fact a minor, this XXXXX may occur. Unless you are specifically told in a question that someone is definitely a minor you have no grounds to assume so. If you went off on a tangent saying someone is a minor in an answer to a question, without being told that they are, you surely will be marked down for it.

Also, the question asks specifically for you to talk about the fax not being received. Crafting your answer to go with that question would not require any input of age.

If there are NO MINORS involved, then why specifically choose Wally and Eddy (both of whom are children) to represent the PRIMARY parties to the transaction ? Doesn’t make much sense to me.
Maybe, because, someone going to college can’t afford a computer on their own, so the parent is buying for them? Maybe a parent is buying their kid something and tells them to go find something they want, and let them know what they have found?

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