Case study research and analysis

Business Law -- Legal Case Study

On September 1, Jennings, a used-car dealer, wrote a letter to Wheeler in which

he stated, "I have a 1955 Thunderbird convertible in mint condition that I will sell you for $13,500 at any time before October 9. [signed] Jennings." By September

15, having heard nothing from Wheeler, Jennings sold the Thunderbird to another party. On September 29, Wheeler accepted Jennings's offer and tendered the $13,500. When Jennings told Wheeler he had sold the car to another party,

Wheeler claimed Jennings had breached their contract. Is Jennings in breach? Explain:

Answer Version #1

Jennings is not in breach because there was never a valid contract. Jennings' letter of September 1st was an offer that Wheeler could have accepted at any time prior to October 9th. However, because Wheeler never provided any consideration (such as a down payment), the offer was nothing more than a gratuitous promise that could have been rescinded by Jennings at any time without penalty.

In certain circumstances, Wheeler could have had a valid claim against Jennings. For example, if Wheeler could prove that he chose not to purchase a comparable vehicle for $14,000 on September 20th because he knew that he had the opportunity to buy Jennings' car, Wheeler could argue that he relied on Jennings' gratuitous promise to his detriment. In that case, if Wheeler went back to purchase the $14,000 but the second dealer had raised the price to $15,000, Wheeler might be able to purchase that car and them prevail in a claim against Jennings for the benefit of the bargain that he lost because he passed up the chance to buy the second car relying on Jennings' promise. Wheeler could seek $1,000 in damages from Jennings because that is the amount of the difference between what he would have paid for the second car if he had purchased it at the time that he passed up the chance relying on Jennings' promise. Absent detrimental reliance of some sort, Wheeler cannot overcome the gratuitous promise/lack of consideration issue.

Answer Version #2

There was no contract between them because Wheeler never gave up anything in consideration for the Jennings promise. At most, the Jennings letter was only an offer that Wheeler could (and would have to) have accepted in the ordinary manner in which offers can be accepted in contract formation. The fact that the offer was about a specific item is important too. Had Jennings written "I will sell you any 1955 Thunderbird Convertible for $13,500 before October 9th if I still have any of them in stock" Jennings could not have refused to honor that offer if Wheeler came in to accept it on September 29th. Even then, Jennings could still have retracted that offer anytime simply by notifying Wheeler that the offer was being retracted.