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Question 2 (Offer and acceptance) John is interested in purchasing a Riviera 80 foot...

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Question 2 (Offer and acceptance)

John is interested in purchasing a Riviera 80 foot luxury boat that he sees at a local marina. In a letter sent by express post to Cassie (the owner) on 10 February, John states: “are you interested in selling your boat? If so, how much do you want for it?” Cassie received the letter on 11 February and by a facsimile to John on the same day replied: “I will sell you my 80 foot Riviera boat for $1.5 million”. Cassie’s husband, George initially sent the facsimile to the wrong number. It was received by Jenna not John. The fax was not specifically addressed to John. George realised his error, resent the fax to John, and immediately telephoned Jenna stating that the facsimile he sent on his wife’s behalf was a mistake and to disregard it. The desperation in George’s voice piqued Jenna’s interest, so much so that after doing some boat research, she sent an e-mail to Cassie accepting the terms of Cassie’s facsimile on 12 February.


On 14 February, John sent a letter to Cassie stating: “I will purchase your boat and jet-ski according to the terms of your facsimile dated 11 February”. Later that day, John suffered a heart attack. On 16 February Cassie received John’s letter of 14 February. Fearing that he may no longer be able to work again, John sent an e-mail on 17 February from his hospital bed to Cassie, which Cassie read at 4pm on that day, stating that “Due to serious illness, I will not be able to purchase your home”. On 16 February Cassie sent a facsimile to Jenna stating that “I confirm receipt of your e-mail dated 12 February. The boat can be purchased by you for $1.6 million provided that you pay a deposit of 10% into my bank account within 7 days. Call me if you have any queries”. On 18 February, Jenna decided to pay the $1.6 million for the boat and duly deposited $160,000 into Cassie’s bank account.


Advise Cassie whether there is a binding contract with: (a) John; and/or Jenna

[1] Idea for this question adapted from CCH Australia, 2013 Australian Business Law Workbook.

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