Formation of Contracts: Canon EOS 800D DSLR and Antique Grandfather Clock

Scenario 1: Sale of Canon EOS 800D DSLR camera on Facebook

Question 1

Richard wants to sell his camera. He uses his Facebook page to do this. On 3 April 2018, he posts: “For sale: Canon EOS 800D DSLR. Barely used. $500”. Richard has also posted low quality images of the camera.

Yvette knows Richard, as he is dating her older sister, Joan. She sees his post and is interested in buying the camera. A Canon EOS 800D DSLR retails for $1,999. Yvette sends Richard a private message on Facebook, on 4 April 2018, at 16.30, and they have the following chat:

Yvette Hi Richard. How are you? Is your camera is still for sale? Richard The one in the pictures? It is. Yvette Yes, the one in the pictures. I would like to buy it. Richard It will be $600 plus delivery.

Yvette What? You posted $500.

Richard Yes, well, there has been a lot of interest.

Yvette I have to think about it then.

Richard Let me know soon.

2 hours later, at 18.30, Yvette writes to Richard again on Facebook, saying that she will pay $600 plus delivery for the camera. Richard goes offline at 18.00, shortly after his chat with Yvette. He is preparing dinner for Joan and does not want any distractions, so turns off all his electronic devices. Joan comes over at 19.00. After a romantic, candle-lit dinner, Richard and Joan open their second bottle of wine for the evening and settle down next to the fireplace. Joan mentions that she saw his post regarding that camera. She would like to buy it from him, for $500. Richard immediately tells Joan that she can have the camera and her love is payment enough. Joan replies, “That’s wonderful”. Richard does not see Yvette’s message until the next day. Yvette is furious. She argues that she has a contract with Richard. She further asserts that she should only have to pay $500, as that was his original offer, which she accepted. Joan also argues that she has a contract with Richard. She tells Richard that the camera is in fact a Canon EOS 1300D DSLR, which only retails at $599, and argues that she deserves damages for her loss. Yvette and Joan’s mother is a Partner at the firm where you work and your direct manager. She is irate that a tiff has arisen between her daughters and wants the situation resolved immediately. Especially because Yvette is 17 and should be focussing on NCEA! The Partner asks you to write a business memorandum, outlining whether Yvette or Joan has a binding contract vis-à-vis the camera. Make sure to go through the requirements for formation of contract and to discuss any potential defects, for Yvette and Joan’s cases.

Question 2

A distant relative of Joan recently passed away, leaving her an antique grandfather clock. Joan has no particular need for a grandfather clock. It is large and loud and does not exactly fit with the rest of her decor.

She takes it to Auctioneers Are Us Ltd (AAUL) and asks them to sell it on her behalf. She signs a contract with AAUL, agreeing that they get to keep 30 % of the amount won at auction. Joan also stipulates in the contract that AAUL is not to sell the clock for less than $10,000. The Auction for the clock takes place and, after three bidders push each other higher and higher, the Auctioneer bangs the gavel down, yelling “Sold! To the man in the blue cap, for $8,500!” Normally, once this action happens, there is a binding contract. Joan is furious. She runs to her mother, who asks you to write a business memorandum, outlining Joan’s options. Make sure to discuss whether Joan is bound by the contrac