Podcast: the Ugly
Bob is a stamp dealer. On Monday he puts an advert on his website stating, ‘Utopian Penny Red Stamp, one only, £2,000’.
Later that day, Alan, a stamp collector, telephones Bob and says, ‘The Utopian Red for sale, I’ll give you £1,500 for it’. Bob replies, ‘I cannot accept less than £1,750, but since you’ve been a good customer in the past, I won’t sell it to anybody else before Saturday. Let me have a reply by Friday if you want it.’ Alan says, ‘Thanks, that’s good of you – remind me to buy you a drink when I see you. I’ll think about it and let you know.’
At 7.30 am on Wednesday, Alan sends Bob an email saying, ‘Ok, I accept your offer to sell the Utopian Red for £1,750 – when can I pick it up?’ Unfortunately Bob’s email system diverts this email to his ‘junk mail’ folder, so that he does not read it. At 2 pm on Wednesday Bob sells the stamp to Charles for £1,800.
On Thursday Alan’s wife meets Charles’s wife at the supermarket. Charles’s wife complains about the amount of money Charles has been spending on stamps, including a Utopian Red, which he has just bought from a dealer. Alan’s wife reports this to Alan, who immediately sends a further email to Bob, confirming his previous message. Once he has sent this he notices an email from Bob in his inbox. In this email Bob says that he is having to withdraw his offer to Alan, because he has accepted a better offer from Charles.
Advise Alan.
Podcast: the Ugly
Alan, you have clearly got a problem in your dealings with Bob over the stamp, and you will need good legal advice to sort it out, which I shall now give you. (1) Although you are asked to "Advise Alan" you should always write your answer in the third person. This paragraph says nothing of any value, whereas it should have been the opportunity to identify the legal issues that are going to be dealt with in the rest of the answer.
Bob advertised his stamp in the paper. Alan replied to the advert offering £1,500. Bob refused to accept that, saying that he wanted £1,750. Alan wanted to think about it, but later sent an email saying he would buy at £1,750. Bob did not get this, and sold the stamp to Charles for £1,800. Can Alan do anything about this? (2) This paragraph simply repeats the facts of the problem. No marks are given for being able to copy.
For a contract you need offer, acceptance, consideration and intention to create legal relations. Consideration is defined in Currie v Misa as a detriment to one party or a benefit to the other. In this case, the consideration would be the stamp and the payment of the money for it. Consideration must not be past, and must be of some economic value. If promissory estoppel applies then consideration may not be needed, as shown by Central London Property Trust v High Trees House, where the payment of a reduced rent during the war did not mean the tenants had to pay it back afterwards. Intention to create legal relations is presumed not to apply in domestic contracts, but this seems to be a business transaction so that does not matter. So has there been an offer and acceptance between Alan and Bob? (3) Much of what is said here is accurate, but almost totally irrelevant to the problem. Consideration is not a significant issue, and promissory estoppel is not raised on these facts.
Bob’s advertisement was an offer, as shown by the case about the smoke ball, but Alan did not accept this. He also makes an offer, to buy at £1,500. But Bob does not accept this, and offers to sell at £1,750. We now have three offers!! Have any of them been accepted, which is needed for there to be a contract? (4) The assertion that the advertisement is an offer, based on Carlill, is almost certainly wrong, and ignores cases, such as Partridge v Crittenden which would suggest otherwise. Referring to "the smoke ball case" is just about acceptable in an exam answer, but not in an assignment, where it is expected that the names of cases will be given. Avoid using exclamation marks in essays.
Alan sent an email on Wednesday saying that he would buy at £1,750. This seems to be an acceptance of Bob’s second offer. The postal rule says that posted acceptances are complete on posting, even if they don’t arrive. This is the case of Adams v Lindsell, which involved a contract for the sale of wool. The court held that it was best for everybody if posted acceptances took effect on posting, otherwise the situation would be very complicated and confusing, with no one knowing where they stood. On this basis Alan’s email would be OK as soon as it was sent. (5) This is a weak explanation of Adams v Lindsell, which doesn't analyse the basis for the decision properly (i.e. business efficiency). It is also best to avoid colloquialisms, such the acceptance being 'OK', particularly as it is not clear what this actually means. But the situation is complicated here by the fact that the email is redirected to Bob’s junk mail folder. Is this because Alan has previously sent spam emails to Bob? If so, this will seriously affect his chances of getting the stamp. If, however, the problem is an over-sensitive spam filter on Bob’s machine, Alan can argue that his acceptance took effect as soon as it was received. This is what Lord Denning said in Entores v Miles Far East Corporation. (6) The speculation on Alan's having sent previous spam is inventing facts, which is generally to be avoided, particularly where there is no clear point of law involved. The view attributed to Lord Denning in Entores is inaccurate – the case concerned where an acceptance took effect, not when. So on this basis there is a good contract between Alan and Bob on the Wednesday morning. In any case, the postal rules probably don’t apply to emails, so the Entores case is the better one to use in this situation. This was also the case in The Brimnes, and Brinkibob v Stahag Stahal, which dealt with similar circumstances. But the law is very confused, so it is hard to come to any definite conclusion. (7) The right cases are mentioned here, which will gain some credit. But there is no attempt to analyse or apply them to the problem, with the answer hiding behind the fact that the law is 'very confused'.
Even if it is held that Alan’s email is not a valid acceptance, Bob should not have sold the stamp to Charles. He had told Alan that he would keep the offer open until the end of the week, but he has now gone back on his word and sold the stamp to Charles. He should not have done this without going back to Alan and giving him the chance to buy the stamp at £1,800. What he has done is very unfair and probably illegal. It might give rise to promissory estoppel, under which promises that are relied on by someone else become enforceable – as in Combe v Combe, where a wife sued to recover money promised to her by her husband. (8) This shows ignorance of the case law on promises to keep offers open (Routledge v Grant) and so comes to an inaccurate conclusion. Promissory estoppel cannot apply here because, as was held in Combe v Combe, it cannot be used as the basis of a claim, only as a 'shield'.
To be fair to Bob, he did send an email to Alan saying that he was withdrawing his offer. Also, Alan’s wife told him that Charles’ wife had told her that Charles had bought a Utopian Red stamp from a dealer, so Alan has probably guessed that this was the same stamp that he wanted, which is why he sent the email to Bob again accepting Bob’s offer to sell at £1,750, but this was too late as Bob had already sold the stamp and so could not sell it to Alan any longer, contrary to what he had originally promised. (9) There is no law here, and the second sentence of the paragraph is far too long. Discussion of Dickinson v Dodds was required, together with a careful analysis of the timing of the email exchanges.
So, Alan, how can I advise you? Your email to Bob was an acceptance so you can say that you have a contract. You might also be able to claim promissory estoppel in relation to Bob’s promise to keep the offer open. In the end, I should advise you to get a good lawyer, because it is going to be difficult to argue your case, seeing as how Charles now has the stamp you want and probably won’t want to give it up. You could offer Charles £1,850 for the stamp and in that way everybody would be happy apart from Bob who hasn’t got as much as he wanted for his stamp, but since he has not acted fairly towards you, that doesn’t really matter. (10) As a concluding paragraph, this adds nothing to the essay, consisting as it does of a collection of random thoughts. Advising Alan to get a good lawyer is an abdication of your responsibility to give advice, and your suggestion of negotiating with Charles, while interesting, is irrelevant to the legal issues raised by the problem.