The Open Offer: Consideration, Mutuality Of Obligation
Jimmy, an art dealer and merchant, is running out of funds. Luckily, he owns a priceless Van Gogh painting. He writes his friend Tommy. The letter says “Tommy you remember that Van Gogh painting you were interested in buying? I will offer it to you for $500,000. I will give you one month to accept this offer.” Jimmy signs the letter. Tommy receives the letter, and he is very excited. He writes back two weeks later saying that he accepts, and Tommy encloses a check for $500,000. Unfortunately, Jimmy received a better offer for the painting, and Jimmy accepts that one.
Is there a breach of contract?
If so, what remedies may Tommy get?
A contract is a legally binding agreement that is between two parties. It is important to note that not all contracts are required by law to be in writing as some can be orally made between parties. However, there are those that are required to be in writing for them to be legally binding such as when they involve buying or selling items ("Elements of a Contract – Contracts", 2017). There are six components to a binding contract, which include; an offer, acceptance of the offer, consideration, mutuality of obligation, competency and the written instrument.
In the facts of the case between Jimmy and Tommy include an offer placed in writing to Tommy by Jimmy. Jimmy made the offer by stating that he would sell the Painting to Tommy for half a million dollars and signed it. Jimmy also indicated that he would give Tommy one month before the contract becomes void. After two weeks, Tommy is seen to accept the offer, which in this case is within the timeframe of the valid contract (Pannone, 2015). According to the case, Tommy is also seen to have the competency or the capacity. However, Jimmy accepts another before within the one month he had made the offer to Tommy.
In the evaluation of the case, it is important to state that the there is a breach in contract. One of the aspect tha
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