Contracts Assignment 1 (S1 2013)

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ASSIGNMENT QUESTION Following a short telephone conversation, Alvin agrees to buy a 1964 Cadillac Coupe de Ville from Buster for the bargain price of $25,000. The arrangement is that Buster is to have the car air freighted from Cairns in approximately four weeks’ time. Alvin sends Buster a cheque for $2,500 as a deposit. Alvin has bought the car only as an investment, since he has no particular interest in vintage vehicles. He is interested in a quick sale, and anticipates a lot of interest. He advertises the Cadillac for sale on 1 March in a specialist vintage car community newsletter. The asking price for the car is $35,000, with delivery in four weeks. The following day, Alvin receives a phone call from Chuck. After a short conversation, Chuck offers to buy the Cadillac for $33,000. Alvin explains to him that there has been a ‘lot of interest’ in the car and that he will respond to the offer as soon as possible. He asks Chuck to give him a few days to think about it. Chuck agrees to wait for Alvin’s confirmation of the sale until 5pm on 7 March. Alvin is confident he will be able to sell to Chuck, but he anticipates better offers. On 3 March Alvin receives an email from Dexter who offers $32,500 for the Cadillac. Dexter explains in the email that he is a serious collector of vintage cars but that he wants to be ‘personally notified’ in writing by Alvin of any acceptance by 7 March. On 4 March Alvin has a telephone conversation with Emil, who agrees to buy the vintage car for $35,000. However, Emil makes it clear that, because the car is not yet in Alvin’s possession, he insists that ‘a written contract must be signed’ by both of them. Alvin tells Emil he agrees to proceed on that basis. Privately, he thinks this is the best course of action, just in case the deal with Chuck does not eventuate for some reason. He tells Emil that his solicitor ‘will put the agreement in writing’ and send it to Emil for his signature. Alvin then contacts Buster and asks for confirmation that he has received his deposit cheque. Buster confirms receipt and tells Alvin that he is making arrangements for delivery of the vehicle. In the next couple of days, Alvin answers a few enquiries about the car but no offers interest him. Despite the arrangement with Emil, Alvin decides that it would be better to sell the car to Chuck in order to avoid delay, solicitor’s costs and the hassle of signing a written agreement. He rings Chuck on the morning of 6 March and tells him he will accept his offer. Chuck says that because so many days had passed he had assumed Alvin was not interested in proceeding. Chuck informs Alvin he has bought a vintage Oldsmobile instead and that he will not be proceeding with purchase of the Cadillac. Alvin is very angry with Chuck and insists that they have a binding agreement. He threatens Chuck with legal action for breach of contract. Despite their heated exchange, Alvin later decides the best course of action is to respond in writing to Dexter. He posts a letter on the afternoon of 6 March addressed to Dexter accepting his offer. However, he changes his mind within hours and concludes that it would be better to proceed with the written contract with Emil. He immediately rings Dexter and leaves a phone message telling him to ignore the letter he sent earlier in the day, and that he has decided to keep the car. Several hours later, Dexter listens to the message but decides to ignore it. When Alvin’s letter arrives, he immediately sends a letter in reply thanking him and attaching a cheque for $2,000 ‘by way of deposit’. On the following day, Buster rings Alvin and says that the air freight and insurance costs have turned out to be much more than he anticipated because of changes to Queensland goods regulations. He says he will pull out of the deal unless Alvin agrees to add $2,500 to the purchase price. Alvin argues with Buster, but then agrees to pay the additional amount in order to be able to proceed with the written contract with Emil. When the Cadillac arrives, Alvin sends a cheque to Buster for the purchase price as originally agreed, but without the extra $2,500. Buster rings him and abuses him for breaking their agreement. He threatens to take legal action to recover the $2,500. When Dexter’s letter and cheque arrive, Alvin sends him an email insisting he had already rejected the offer. He returns the cheque by mail on the same day. Two days later, Alvin receives a letter from Dexter accusing him of fraud and threatening legal action. The next day, Alvin is getting ready to go to his solicitor’s office to discuss the written contract with Emil and the letter from Dexter. As he is about to leave home, he receives a text message from Emil who informs him he can’t proceed with the purchase because he has decided to become a monk and give up all worldly goods. When Alvin telephones Emil he is told: “We never signed any contract, so that’s it. Goodbye and peace be with you.” Alvin does not know whether he has any binding agreement with, or possible action against, anyone in relation to the vintage Cadillac. He seeks your advice about his legal position in respect of each of the parties mentioned above.

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