BREACH OF CONTRACT CASE STUDY

BY:
JAIME N. JACKSON

BUSINESS LAW 275-01 FINAL EXAM

INSTRUCTOR: DR. KYLAR BROADUS
NOVEMBER 13, 2009

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 BREACH OF CONTRACT CASE STUDY

Bob Oldman owned a cottage on Wind Lake. He really didn’t have enough time to enjoy

the property during the summer, so he posted a For Sale by Owner sign, giving his phone

number. On July 10, Dave Honigman called to ask about the property, and Bob agreed to show

it to him the next day. Bob showed Dave around the property and Dave carefully inspected

everything. After looking it over, Dave asked what Bob was asking for it. Bob replied that his

price was $45,000. Dave looked rather surprised, but said, "I'll think it over." They exchanged

business cards and Dave left. By July 19, Bob heard nothing from Dave and thought that he has

probably priced the cottage too high. Therefore, he typed a note with which read, "Dear Dave: I

am offering to sell you my cottage on Wind Lake for only $42,000. Please reply by July 22 if

you accept my offer." Bob mailed his offer the same day. Dave received Bob's offer on July 20.

He immediately replied as follows, "Dear Bob, I hereby accept your offer on the cottage for

$42,000, providing that you repair the rotted planks in the dock." He signed it and mailed it the

next morning. On July 22, Dave decided that he would rather rebuild the entire dock himself,

and wrote to Bob, "I'll take the property just as it is for $42,000." He signed and immediately

mailed his letter. On the evening of July 22, Bob was contacted by Mitch Moneybags, a big

resort developer. Mitch has a plan to buy up all the property on the south shore of Wind lake and

turn it into a resort complete with a golf course, tennis courts, swimming and boating. He told

Bob that he was willing to pay him $50,000 for his land. When he heard the figure, he forgot all

about Dave, and he signed a contract to sell to Mitch. On July 23, Dave's first letter was

delivered to Bob's house and on July 24, the second letter was delivered. Bob returned from a

long weekend on July 26 and read both in the order they were sent. He called Dave and told him

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that he had made a deal to sell to Mitch. Dave replied that they already had a contract before

Mitch had gotten involved and that it was a breach of contract for him to sell to Mitch for more

money. Does Dave have a good case against Bob for breach of contract? Why or why not? If

so, what remedy should he seek?

No, Dave does not have a case against Bob for breach of contract. A breach of contract is

a business contract that has obligations that are to be fulfilled by the people or companies who

entered into the agreement.  According to the law, a party's failure to fulfill an end of the bargain

under a contract is known as a "breach" of the contract. Depending on the specifics of the

contract, a breach can occur when a party fails to perform on time, does not perform in

accordance with the terms of the agreement, or does not perform at all. In this situation the

mailbox rule was used. In contract law, the mailbox rule is making a written offer or acceptance

of offer valid if sent in the mail, with postage, within the time in which the offer must be

accepted, unless the offer requires acceptance by personal delivery on or before the specified

date. Although Dave sent the acceptance to Bob before July 22, the original contract is not valid.

Dave modified the original contract by stating he would only buy the cottage for $42,000 if he

repaired the rotted planks in the dock. The "mirror image rule" states that if you are to accept an

offer, you must accept an offer exactly, without modifications; if you change the offer in any

way, this is a counter-offer that kills the original offer. Bob would then have to agree to that

offer before they could enter a contract.