Answer to Question #233088 in Management for Bob

Question

On May 20, cattle rancher Oliver visited his neighbour Southworth, telling him, "I know you're interested in buying the land I am selling". Southworth replied, "Yes. "Although the two men did not discuss the price, Oliver told Southworth he would determine the value of the property and send that information to Southworth. "On June 13, Southworth called Oliver to ask if he still planned to sell the land. Oliver answered, "Yes, and I should have the value of the determined soon. "On June 17, Oliver sent a letter to Southworth listing a price of quotation of $324,000. Southworth then responded to Oliver by letter on June 21 stating that he accepted Olivers offer. However, On June 24 Oliver wrote back to Southworth saying" There has never been a firm offer to sell, and there is no enforceable contract between us. "Oliver maintains that a price quotation alone is not an offer. Southworth claims a valid contract has been made. Who wins? Discuss?

Answer 1

Oliver wins. A price quote isn't legally enforceable. When two parties make promises to each other, they form a legal contract. A quote isn't a guarantee that Oliver will sell the land, and it's certainly not a guarantee that Southworth will pay for it. As a result, a price quote is not legally binding. Oliver's offer to sell his land via a quote is the start of a formal contract. Southworth can then accept or reject the offer, as well as request revisions. If one party does not follow through on a legally enforceable deal, either party can take the other to court. A formal contract can help with this because each party's rights should be spelled out explicitly.