A timber merchant sends a written letter to a furniture manufacturer offering to sell 100 mahogany planks at ₦20,000 each, stating that the offer remains open until Friday. On Wednesday, the manufacturer responds by offering to purchase the planks at ₦18,000 each, which the merchant rejects. On Thursday, the manufacturer contacts the merchant attempting to accept the original price of ₦20,000 each. Under commercial law, what is the legal status of the transaction between the two parties?
- No binding contract exists because the manufacturer's counter-offer terminated the original offer.Answer
- BA valid contract exists because acceptance occurred before the stated Friday deadline.
- CA voidable contract is formed which the timber merchant can choose to validate or cancel.
- DAn enforceable contract exists because the merchant's initial proposal was a binding invitation to treat.
Answer
No binding contract exists because the manufacturer's counter-offer of ₦18,000 legally terminated the original offer of ₦20,000.
Under the law of contract, a counter-offer introduces new terms and legally destroys the original offer. Once the manufacturer proposed a price of ₦18,000, the original offer of ₦20,000 lapsed permanently and could not be accepted on Thursday without a fresh proposal from the merchant.
Step-by-Step Solution
Key Concept
Termination of an Offer by Counter-Offer (Hyde v. Wrench Rule)
Estimated Time:1m 0s