Answer to Question #252704 in Management for Selina

Question

Southworth replied, "Yes, I do want to buy that land, especially since it adjoins my property. "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 so that he would have “notice” of what Oliver“ wanted for the land.”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 land determined soon. " On June 17, Oliver sent a letter to Southworth listing a price 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? 

Answer 1

There is a genuine and enforceable contract to sell the property, as Southworth claims. Despite the general rule that a price quotation by itself does not constitute an offer, "there may be instances in which a price quotation, when examined in conjunction with facts and circumstances, may form an offer that, if accepted, will result in a binding contract." To determine whether Oliver has conveyed his purpose to enter into a contract, consider what a reasonable person in Southworth's situation has been persuaded to believe.In this case, the circumstances surrounding the June 17 letter (which was only a price quotation) led Southworth to believe Oliver had made an offer to sell the ranch holdings.