Dorothy, a widow, felt the family home was now too large for her to manage. She told her adult children that she was selling the home called ‘Gum Leaves’. Brian, Dorothy’s son’s closest friend, had always loved Gum Leaves and offered to buy it from Dorothy. Dorothy thought about Brian’s offer and sent him a letter which stated in part:
“I would be happy to sell you my family home ‘Gum Leaves’ for a price of $2,000,000.”
Brian responded that he would only be able to pay $1,500,000, payable in four equal instalments over a two year period.
Dorothy wrote back to Brian, indicating that she was prepared to accept $1,500,000, and asking whether he would pay cash in one lump sum on settlement. .Brian then replied:
“I am delighted that we have reached agreement about the sale of “Gum Leaves”. I will need to pay you in four instalments as previously advised.”
Meanwhile, Dorothy received a letter from Lionel, a property developer, which advised:
“I would be happy to pay $1,750,000 in cash for your fine family home. Please advise by phoning 9788 2XXX if this is acceptable to you.”
After she received the reply from Brian advising he would still be paying in instalments, Dorothy phonedLionel and said that she was happy to accept his offer, subject only to a contract being drawn up in a form which was acceptable to her family solicitors.
Dorothy phones her son David, telling him that she has sold the house to Lionel and asks him to let Brian know. When David phones Brian, Brian says “It’s too late – we already have a contract.”
Lionel changes his mind and tells Dorothy he is not proceeding with the purchase.
Advise Dorothy whether she has a binding contract for the sale of Gum Leaveswith either/neither or both of Lionel and Brian.
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