Question

On June 1, Maureen sent a letter to Joel that offered to sell 10 000 shares...

On June 1, Maureen sent a letter to Joel that offered to sell 10 000 shares in Tadpole Inc (a computer software company) for $5 each. Her letter did not require Joel to respond by any particular date. On June 3, Tadpole Inc publicly announced that its engineers had perfected a new technology that would revolutionize the electronic commerce industry. On June 5, Joel returned from his cottage and learned of both Maureen's offer and the price of Tadpole Inc shares. He promptly sent a letter to Maureen that said, "I accept your offer. I will pay a total of $50 000 for 10 000 shares in Tadpole Inc." and proceeded to sell 100 shares in stock in Apple Computers to pay for it. By June 6, the price of a single share in Tadpole had increased to $100. Maureen immediately mailed Joel a letter withdrawing her offer. On June 7, Apple announced its new iPhone and its stock immediately increased by $300 per share. On June 8, Maureen received Joel's letter accepting the contract. On June 9, Joel received Maureen's letter withdrawing her offer. Maureen refuses to sell Joel the Tadpole stock.

Should Joel sue Maureen for breach of contract? If so, would he be successful and what are his remedies? Can Joel recover even if he would not be successful for breach of contract?

Business   Operations-Management   
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Answer #1

Joel is entitled to Tadpole shares due to her acceptance of the contract which took place before the letter of revocatoon of offer from Maureen was received.

In acceptance and revocation of offer ,mailbox rule is applied. An acceptance is enforceable as soon as it is posted. And for an revocation to be effective, the letter must be received by the other party (I.e. joel)

Since Joel mailed the acceptance on 6th, this is a confirmation of a contract which makes both Joel and Maureen binding.

Yes, Joel may sue maureen for the contract.

Yes ,she will be successful given the information provided above based on mailbox rule.

Remedies available are : specific performance , compensation and damages.

Yes ,she can be successful in obtaining damages even if she can't prove breach of contract based on reliance loss as she lost money in apple stock due to reliance on the offer made by Maureen.

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