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On April 1, Beta Industries, Inc.

On April 1, Beta Industries, Inc. (BI) sent Harley a letter, via overnight delivery, offering to employ her to audit BI's financial statements for the current year for $10,000. In the letter, BI stated that Harley had ten days to accept. On April 5, Harley sent BI a fax that stated, "The price for the audit seems too low. Would you consider paying $12,000?" BI received the fax. The next day, Harley's competitor Davidson offered to conduct the audit for $8,000. On learning of Davidson's offer, Harley immediately e-mailed BI, agreeing to do the work for $10,000. BI received this e-mail on April 7.

1. Explain why BI and Harley do, or do not, have a contract.

Real Estate Investments (REI) owns and manages an office building. Insurance Company agrees to lease the building for five years. Under the lease, Insurance is obligated to pay all of the utility costs. Two years into the term, Insurance asks Real Estate to modify the lease to provide that the utility costs be split equally between them. Real Estate agrees, but later decides it does not want to share the costs and refuses to pay.

2. Is the landlord bound to its agreement to share the utility costs? Why or why not?

For months Laural had tried to persuade Hardy to purchase a $50,000 computerized system for all accounting records of Hardy's plastic manufacturing company in Fort Lauderdale. Finally, he persuaded Hardy to visit Miami in order to inspect a similar installation already in use. That night Laural took Hardy to dinner at an exclusive restaurant in South Beach and then to a Marlin game. After the game they went to a South Beach night club and had several drinks. Before the evening ended, Hardy had signed the contract saying "let me sign that contract and let's get on with the fun".

3. Is Hardy legally bound or April he disaffirm? Explain.

Mary received a diamond brooch from the estate of her maternal grandmother. It was appraised at $7,500. Because it did not fit in with her sports oriented life style, Mary sold the brooch to a jeweler who told her, "the setting is old fashioned, but the diamond is forever the same. I'll give you $3,500 cash". Later Mary wondered whether she receive legally sufficient consideration.

4. Did Mary receive legally sufficient consideration? Explain.

5. Did the jeweler act ethically? Explain.

Solution Preview

1) No, BI and Harley do not have a contract. The April 5th fax was a counter offer. Making a counter offer is effectively rejecting the initial offer, and therefore the ball was in BI's court and they are free to sign with Davidson instead of Harley for their audit. The April 7 email was received AFTER the counter offer and therefore there is no enforceable agreement.

2) It depends. The question makes no mention as to whether ...

Solution Summary

The expert explains why BI and Harley do or do not have a contract. Real Estate investments are determined.