Contract law problems, Business Law and Ethics

Case Study

Cathy's septic tank at her house was old and it suddenly stopped  working.  On 9 June 2008 she called Dave, the owner of Septix Pty Ltd (-Septix?), to urgently give her a quote on installing a new one of the same type.  Dave promised to post her a quote in the mail that afternoon which he did.  

Cathy received the quote in her mailbox on 10 June 2008 which said: -

"Enclosed is a quotation for the replacement of your septic tank, including equipment, parts and installation, at 41 Downing Street, Jockville, NSW for the amount of $8,000.  If the quotation is acceptable and you wish to proceed, please sign the enclosed terms and conditions of sale document and mail it back to us with a cheque for a 20% deposit within 7 days from the date of this quotation".

 Cathy was desperate to have her septic tank replaced as soon as possible so she decided to accept Dave's quote by signing the forms and writing a cheque for a 20% deposit and putting them both in the reply paid envelope provided by Septix.  Cathy then dropped the letter in the post office mail box that afternoon.  

On the morning of 11 June 2008, before Dave's mail was delivered, Dave realised that the quote should have said $10,000 but his secretary had mistakenly typed the quote as $8,000.  Dave telephoned Cathy to tell her this but Cathy replied that she had already accepted the quote for $8,000 and that she had posted the acceptance and the cheque back to him the day before.  Dave argued that since he had not yet received the acceptance that it was not valid.  

Using the law of contract, advise Cathy and Septix whether there was a binding contract between them.  In your answer explain the basis for your answer and discuss what rights each party has under the contract, if any.

Posted Date: 2/21/2013 5:23:26 AM | Location : United States







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