Question

Carlos visited Vancouver last summer and instead of going back to Ontario he stayed and enrolled at Simon Fraser University. He needed money but didn't need things left in Ontario, including his car. In mid-December, he wrote a friend and offered to sell the car for $4000 and told him to send him a letter with his answer. His friend received the letter on January 2, checked his financial situation, and sent a letter of acceptance on January 3. Meanwhile Carlos, short of cash and not having heard from his friend, sold the car to Mr. Reno on December 31. Carlos received his friend's letter on January 8. On these facts, which of the following is true?

A) In order for there to be a binding contract, there must be an offer and receipt of the letter.
B) All methods of acceptance are effective upon receipt by the offeror.
C) The letter of acceptance was effective when it was received, and by then Carlos had sold the car, so there was no contract.
D) The acceptance was effective before it was received, so there was a contract between Carlos and his friend.
E) Sending an acceptance by mail was not a reasonable method of acceptance in this situation.

Answer 1

According to the mailbox rule in contract law, an acceptance is typically effective when sent, not when received. If the mailbox rule applies and no specific method of acceptance was required by Carlos, there was a contract between Carlos and his friend when the letter of acceptance was mailed. If not, and Carlos required acceptance to be received or mailing was not reasonable, then no contract was formed.

Step-by-step explanation:

The situation between Carlos and his friend involves determining when the acceptance of an offer becomes effective, which is a core concept in contract law. According to the 'mailbox rule', also known as the 'postal rule', an acceptance is generally considered effective when it is sent, not when it is received by the offeror. This would mean that the acceptance by Carlos's friend was effective on January 3, when he sent his letter of acceptance, assuming that a letter was a reasonable method of acceptance and there was no stipulation for acceptance to be effective upon receipt.

However, the critical question here is whether sending an acceptance by mail is considered a reasonable method of acceptance in the circumstances. Considering the nature of communication and expected promptness in a sale of such nature, it is a matter that needs specific legal interpretation based on jurisdiction and the specifics of the case. If the mailbox rule applies, there was a contract between Carlos and his friend when the friend mailed his acceptance (answer D). However, if Carlos's initial offer required acceptance to be received to be effective, or if mailing was not a reasonable method of acceptance, then there was no contract (answers A, B, and E).

In the case where no specific method of acceptance was required, and the mailbox rule applies Carlos would be in breach of this contract when he sold the car to Mr. Reno on December 31. Still, if Carlos had included a term that the acceptance needed to be received by a certain date to be effective, then the contract with his friend would not have been formed.