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The law of obligationsSection BSyllabus BCorporate and Business Law

ACCA · Question 47 · The law of obligations

Scenario: 'AeroDyne Drone Logistics Ltd' negotiates with 'MediSupply Co' to provide vaccine delivery routes. AeroDyne emails: "We offer the Northern route for £50,000 per year." MediSupply replies: "Would you accept payment in 12 monthly installments?" AeroDyne ignores this reply and sells the route to a competitor. MediSupply claims AeroDyne breached the contract.

Question: Can MediSupply successfully sue AeroDyne for breach of contract?

Answer options:

A.

Yes, because AeroDyne's offer was legally binding the moment it was sent.

B.

Yes, because MediSupply's request for information acted as an acceptance.

C.

No, because MediSupply had not yet accepted the offer, so no contract was formed.

D.

No, because MediSupply's reply was a counter-offer which destroyed the original offer.

How to approach this question

Determine if the three elements of a contract (offer, acceptance, consideration) are present. Since the reply was a request for info, there is no acceptance.

Full Answer

C.No, because MediSupply had not yet accepted the offer, so no contract was formed.✓ Correct
For a binding contract to exist, there must be a clear and unconditional acceptance of the offer. Because MediSupply only asked a question (a request for information), they had not yet accepted the offer. Therefore, no contract was formed, and AeroDyne cannot be sued for breach.

Common mistakes

Assuming that an offer cannot be withdrawn while the offeree is asking questions about it. An offer can generally be revoked at any time before acceptance.
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