Question

Chip Monk has been in the business of supplying commercial carpet to companies for several years. On 11/1 Polly Ester’s Supplies calls to purchase 100 yards of “Heather Blue, Industrial Grade” carpet. Chip offers the carpet at $37 per yard, with delivery on or before 12/31, payment on delivery. Polly accepts. On 11/3 Polly sends the following letter confirming the deal: “As discussed and agreed, we hereby accept your offer for 100 yards of “Heather Blue, Industrial Grade” carpet at a price of $37 per yard, delivery on 12/31 or earlier, payment on delivery. We also reserve the right to purchase up to 500 yards more at the same price for a period of six months from this date (signed) Polly Ester (owner of Polly Ester’s Supplies.) As of 11/21 Chip has not responded to Polly. You have been asked by Chip to draft a memo indicating the following: Is there a contract? If so, for what? What law applies here and why?

Answer 1

Let’s review the situation.

On 11/1

The original offer was to purchase 100 yards of Heather Blue Industrial Grade carpet at the cost of $37 per yard.

On 11/3

Polly sends acceptance of the offer with a counter offer of purchasing addition 500 yards more within the next 6 months.

On 11/3, Polly attempted to modify the terms of the original contract and has practically provided a counter-offer. Whenever a counter offer is made to an original offer, the original offer becomes invalid. At this instance, it is up to Chip to accept the offer that has been sent by Polly. However, since there has not been any explicit acceptance to the new offer sent by Polly, the basic requirement of contract (Acceptance) is not fulfilled.

Thus there is no contract. The law applied here is Contract Law and the basic elements that are required for a contract.