Contracts

Ted is a motorbike dealer. On Monday, he placed an advertisement in a local newspaper offering to sell a new Honda motorbike for £8,000. The advertisement stated that payments can be made by cash only. Charlie saw the advertisement on Wednesday. He instantly replied by posting a letter that he would take the bike for £7,000 and would be paying full price by cheque. In his reply, he duly gave his contact details including his office fax number. On Friday, Ted replied by fax: ‘Cash preferred for advertised amount. The bike will be yours for £8,000 unless I hear from you to the contrary by Tuesday morning’.

Consider both case scenarios:

1. Charlie decided to buy the bike elsewhere. He immediately posted a rejection letter. Due to his carelessness in wrongly addressing the letter, Ted has never received it. Ted arranged for delivery of the bike to Charlie’s office on Wednesday morning asking for the price. Charlie refused to take it claiming there was no contract.

Advise Ted whether or not contract was made. Refer to existing court decisions to support your advice. Discuss fully reasons that support your conclusions.

2. Charlie decided to get the bike. He has not been in touch with Ted but he has contacted his bank manager on Monday morning to arrange a loan to purchase the bike. On Sunday, Ted changed his mind and sold the bike to John, Ted’s best friend. On the same day, John called Charlie to tell him about the bargain he has just made. Charlie phoned Ted on Tuesday morning requesting delivery of the bike. Ted refused to deliver claiming there was no contract.

Advise Charlie whether or not contract was made. Refer to existing court decisions to support your advice. Discuss fully reasons that support your conclusions.

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