Option Contract and Postal Rule

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  • Avatar of hamzaharoon
    hamzaharoon
    Participant
    • Topics: 34
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    Dear Sir Mike,

    I have a question in mind, just suppose I am a car dealer and I put a board stating price of the car as $10,000 on a brand new car as Inviting others to make offer (Invitation to treat). 2 separate parties A and B came to me and both makes an offer of $8,500 instead of $10,000 and I made the counter offer of $9500 and tell them my offer will remain open till the next 2 days and will finish at 12 o clock of the second day if they each give me $50 (Option contract). both parties agreed and gave me $50, Now they both need to go for a business trip but they provide me acceptance using letters post, A posted his letter on 11:30 am of 1st day and B posted his letter by 12:15 am on 1st day also. as we know that agreement is binding if offer is accepted through post, both letters arrive but letter of A arrives before 12 o clock of 2nd day and letter of B arrives after 12:30 am. now the question is WHICH AGREEMENT IS BINDING? Who deserves the car Either with A or B ? and what happens if both letters arrive before 12 o clock of 2nd day ?


    Avatar of MikeLittle
    MikeLittle
    Keymaster
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    Well, you’re a bit crazy making offers to sell the same car to two different people!

    Postal rule is only effective if both parties thought that postal acceptance was an appropriate medium. Clearly, from your question (“…came to see me ….”) face-to-face contact has been made when the “offer, counter-offer” was happening and, unless you had said at that time something like “send me a letter to arrive no later than…” than I can’t see that acceptance by post could be claimed to be an appropriate medium.

    My answer would therefore be that neither of them has a contract …. unless!

    Unless you choose to accept the acceptance by post of one of then ( and clearly not of both ) It seems to me therefore to be a voidable contract with you in the position of deciding whether to go ahead with it.


    Avatar of hamzaharoon
    hamzaharoon
    Participant
    • Topics: 34
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    Thanks Sir for Replying, Actually a very similar question was found on BPP revision kit of Chas and Dav and I cant understood that question that’s why I asked….again thanks for reply


    Avatar of MikeLittle
    MikeLittle
    Keymaster
    • Topics: 1
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    In Chas and Dave, because it was the case that, in the mind of the seller, postal acceptance was not appropriate and therefore acceptance did NOT take place with effect from putting the acceptance letters into the mailing system, then acceptance would only take place when actually notified to the seller ( it was Ann wasn’t it from Ann’s Art Gallery )

    Thus, when Ann opened Chas letter on Monday morning BEFORE the end of the option period, then she was in contract from the moment of notification.

    But Dave’s letter of acceptance arrived AFTER the deadline and therefore there was no contract

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