On December 1, Petroleum, Inc., sent Rachel & Rico (R&R) a letter, via overnight delivery, offering to employ R&R to review Petroleum’s tax situation for the current year for $10,000. In the letter, the company stated that R&R had ten days to accept. On December 5, R&R sent an e-mail message that stated, “The price for the tax analysis seems too low. Would you consider paying $15,000?” Petroleum received the message without responding immediately. The next day, Smith & Taylor, an R&R competitor, offered to conduct the appraisal for $8,000. On learning of this offer, R&R immediately e-mailed Petroleum, agreeing to do the work for $10,000. Petroleum received this message on December 7. Explain why R&R and Petroleum do, or do not, have a contract.

Question

What will be an ideal response?

Answer 1

R&R and Petroleum have a contract. R&R effectively accepted Petroleum’s offer to perform a review of the corporation’s tax situation.An attempt to change the terms of an offer rejects that offer, terminates it, and makes a counteroffer. Here, however, the fax did not indicate an intent to reject the offer, and a reasonable person in Petroleum’s position would not conclude that the fax was a rejection. R&R’s fax was simply an inquiry about the offer. R&R was still considering the offer. Learning of Smith & Taylor’s offer did not act as a revocation of Petroleum’s offer to R&R (although the offer would have been revoked if R&R had accepted Smith & Taylors’s offer, and R&R had learned of this acceptance).In accepting Petroleum’s offer, R&R used a medium that was reasonable under the circumstances because Petroleum did not expressly specify any particular method of acceptance. Thus, R&R’s acceptance was timely sent and received. Consequently, the acceptance was effective on dispatch.