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Breach of Contract hypothesis

Paul was a plumbing contractor. Albert and Bert owned an apartment building. Albert and Bert explained to Paul that plumbing work was needed for their respective buildings.

On January 15, Paul mailed offers to Albert and Bert, offering to do the work on their respective buildings for $2000. In each case, the offer stated it would remain open until January 30.

On the morning of January 20, Albert mailed by regular mail a properly addressed letter to Paul stating, "We've got a deal". That afternoon, Albert spoke to Carlos, another plumber, who said he would do the job for $1500. Albert immediately sent an express mail letter to Paul, stating "disregard any communication of acceptance of your offer; I will contract with another party unless you reduce your price to $1500."

On January 21, Paul received the letter Albert sent by express mal on January 21, and sent back a response to Albert by fax advising that he would not reduce his price.

When Albert called Carlos, Carlos advised that he was now too busy and could not take on any more work. Albert then called Paul, and told him to disregard his express mail letter, and that his acceptance was "in the mail".

On January 24, Bert mailed a letter to Paul stating "$2000 is rather steep, would you consider a 25% discount for early payment? Paul received the letter on January 27, and returned a fax to Bert that he would not provide a discount, since his price already contained a substantial discount factor. Bert then faxed an acceptance of the January 20 offer at $2000, advising that Paul could "begin immediately".

1. If Albert sues Paul for breach of contract, Paul will:

(a) Lose, because Albert timely accepted Paul's offer;

(b) Win. Albert's counter-offer destroyed Paul's offer, and he could not reconstruct the offer and accept it after the counter-offer.

(c) Lose. Albert's express mail was a rejection and not a counter-offer. Albert could revoke his rejection and timely accept

(d) None of the above is applicable.

2. If Bert sues Paul for breach of contract, Paul will:

(a) Lose, because Bert timely accepted Paul's offer;

(b) Win. Bert's counter-offer destroyed Paul's offer, and he could not reconstruct the offer and accept it after the counter-offer.

(c) Lose. Bert's fax was a rejection and not a counter-offer. Bert could revoke his rejection and timely accept.

(d) None of the above is applicable.

Solution Preview

1. If Albert sues Paul for breach of contract, Paul will:

(b) Win. Albert's counter-offer destroyed Paul's offer, and he could not reconstruct the offer and accept it after the counter-offer. The rule is that if the buyer makes any change to the offer it becomes a counter offer and has the effect of rejecting the ...

Solution Summary

Breach of Contract hypothesis is discussed in great detail in this solution.

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