Business Law question

Question

1. On February 1, 2020, Olivia, a medical supply wholesaler, sent a signed letter to Noah, a medical clinic owner. In the letter Olivia offered Noah to buy 1000 surgical masks for $200. The offer stated that it is irrevocable until April 1st. On February 15, as the Covid-19 threat began materializing in NY, Ben offered Olivia to buy the 1000 masks for $500. Olivia immediately texted Noah: “Hi Noah, I hereby revoke my offer from February 1st. Sincerely, Olivia.” Olivia then called Ben to accept his offer and arrange for the delivery of the masks. On February 16, Noah mailed his acceptance to Olivia, who received it on February 17th. When Olivia failed to perform Noah found an alternative supplier and purchase 1000 masks for $600. Noah sued her for a breach of contract.

Question 1 - Judgment for whom? Explain

question 2 - What remedies, if at all, would the nonbreaching party be entitled to?

Answer 1

On February 1, 2020, Olivia, a medical supply wholesaler, sent a signed letter to Noah, a medical clinic owner. In the letter Olivia offered Noah to buy 1000 surgical masks for $200. The offer stated that it is irrevocable until April 1st. On February 15, as the Covid-19 threat began materializing in NY, Ben offered Olivia to buy the 1000 masks for $500. Olivia immediately texted Noah: “Hi Noah, I hereby revoke my offer from February 1st. Sincerely, Olivia.” Olivia then called Ben to accept his offer and arrange for the delivery of the masks. On February 16, Noah mailed his acceptance to Olivia, who received it on February 17th. When Olivia failed to perform Noah found an alternative supplier and purchase 1000 masks for $600. Noah sued her for a breach of contract.

Applicable Law

The contract of sales of goods is governed by UCC. Surgical masks are goods that are movable and tangible properties. Olivia is a merchant as a medical supply wholesaler. Noah is also a merchant as a medical clinic owner.

Noah v. Olivia

Firm Offer - Feb 1 letter

Under UCC, the offer from both merchants was a firm offer without requiring consideration. The firm offer was irrevocable until April 1st. This is a valid offer.

Ineffective Revocation - Feb 15 Text

Because Olivia had made an irrevocable firm offer to Noah with a time period until Apr 1st, his text on Feb 15 was an ineffective revocation.

Breach of Contract - Feb 15 Test

Olivia breached the contract when he called Ben to accept his offer and arrange for the delivery of the masks on Feb 15.

Acceptance - Feb 16

Noah accepted the offer by mailing his acceptance to Olivia, who received it on February 17th (mailbox rule).

Formation of Contract

There is a valid contract with a valid offer, acceptance, and consideration, without defense.

Conclusion

Olivia is liable for the breach of a valid contract.

Remedies

The contract is the sale of 1000 surgical masks for $200. Because Olivia breached the contract and failed to perform, Noah found an alternative supplier and purchase 1000 masks for $600.

Therefore, Noah as a non-breaching party is entitled to recover $400, the amount of reliance detriment.