<!--[if gte mso 9]> Normal 0 false false false MicrosoftInternetExplorer4 <!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} --> <!--[if gte mso 10]> On April 1, Owner and Buyer signed a writing in which Owner, "in consideration of $100 to be paid to Owner by Buyer," offered Buyer the right to purchase Greenacre for $100,000 within 30 days. The writing further provided, "This offer will become effective as an option only if and when the $100 consideration is in fact paid." On April 20, Owner, having received no payment or other communication from Buyer, sold and conveyed Greenacre to Citizen for $120,000. On April 21, Owner received a letter from Buyer enclosing a cashier's check for $100 payable to Owner and stating, "I am hereby exercising my option to purchase Greenacre and am prepared to close whenever you're ready."

Assume that, for whatever reason, Buyer prevails in the suit against Owner.

Which of the following is Buyer entitled to recover.
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	A.	Nominal damages only, because the remedy of specific performance was not available to Buyer.
	B.	The fair market value, if any, of an assignable option to purchase Greenacre for $100,000.
	C.	$20,000, plus the amount, if any, by which the fair market value of Greenacre on the date of Owner's breach exceeded $120,000.
	D.	The amount, if any, by which the fair market value of Greenacre on the date of Owner's breach exceeded $100,000.

I am away in a monastery under a cloak of silence.

I have absolutely no access to computers or phones.

I will be back on Monday. Take care and be positive.

Life is Glorious!

Robin

--
Robin Bisarya
Ph: (858) 481 7512
940 South Coast Dr. Suite 100
Costa Mesa, CA 92626.

Buyer would normaly loose, but since he won, I'll go for B

<!--[if gte mso 9]> Normal 0 false false false MicrosoftInternetExplorer4 <!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} span.yshortcuts {mso-style-name:yshortcuts;} @page Section1 {size:612.0pt 792.0pt; margin:2.0cm 42.5pt 2.0cm 3.0cm; mso-header-margin:36.0pt; mso-footer-margin:36.0pt; mso-paper-source:0;} div.Section1 {page:Section1;} --> <!--[if gte mso 10]> Buyer won since there was valid K or rather even 2 Ks, since buyer managed to accept both offers before seller actually revoked.

The key to answer is to find here two offers: offer #1 “to sell  Greenacre for $100,000” and second offer to have offer #1 opened for 30 days, if  buyer tenders $100.

As such, offer to sell land was never revoked. Offer can be revoked by death of offeror, revocation by communication to offeree of such revocation, or if offeree learns from other sources that offer was revoked- the news implicates some action of offeror inconsistent with offer being still  opened.  

By mail box rule, revocation is only effective on receipt. Here, buyer actually sent his acceptance first before receiving effective revocation.  Hence K was formed, on April 21, when seller- Owner received a letter from Buyer enclosing a cashier's check for $100 payable to Owner and stating, "I am hereby exercising my option to purchase Greenacre and am prepared to close whenever you're ready."  

So if Owner breached formed K, the damages are as of date of such breach, i.e., on the date Owner sold property to somebody else.

There are two transactions involved; however the issue is the “option” contract between Owner and Buyer. Not two offers. The option contract was based on the “condition precedent” that the buyer pay a consideration of $100. The option was to be exercised within 30 days (if it becomes effective). Not that the payment of the “consideration” was open for 30 days. Owner waited from April 1 - 20, a reasonable time for the consideration before terminating the option contract.

I also think Mail box rule is not triggered.

Now, if you argue that a contract was formed on April 21 (according to your posting) on the receipt of check, how then can you conclude that the contract was breached on April 20 when Owner sold the property? (Retroactive breaching?)

Don’t you think that when Owner sold the land, that terminated the offer in the writing that they both signed as a result of no consideration, and therefore living the Buyer nothing to accept on April 21?.

That is why I think ordinarily it would be hard for Buyer to win. Any wonder why the examiner asked us to assume he won for “whatever reason”? And for whatever reason, his action would be based on the option contract.

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<!--[if gte mso 9]> Normal 0 false false false MicrosoftInternetExplorer4 <!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} @page Section1 {size:612.0pt 792.0pt; margin:2.0cm 42.5pt 2.0cm 3.0cm; mso-header-margin:36.0pt; mso-footer-margin:36.0pt; mso-paper-source:0;} div.Section1 {page:Section1;} --> <!--[if gte mso 10]> <!--[if gte mso 9]> Normal 0 false false false MicrosoftInternetExplorer4 <!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} @page Section1 {size:612.0pt 792.0pt; margin:2.0cm 42.5pt 2.0cm 3.0cm; mso-header-margin:36.0pt; mso-footer-margin:36.0pt; mso-paper-source:0;} div.Section1 {page:Section1;} --> <!--[if gte mso 10]> <!--[if gte mso 9]> Normal 0 false false false MicrosoftInternetExplorer4 <!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} p {mso-margin-top-alt:auto; margin-right:0cm; margin-bottom:5.75pt; margin-left:0cm; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} @page Section1 {size:612.0pt 792.0pt; margin:2.0cm 42.5pt 2.0cm 3.0cm; mso-header-margin:36.0pt; mso-footer-margin:36.0pt; mso-paper-source:0;} div.Section1 {page:Section1;} --> <!--[if gte mso 10]> “Don’t you think that when Owner sold the land, that terminated the offer in the writing that they both signed as a result of no consideration, and therefore living the Buyer nothing to accept on April 21?. “

 

Is actually wrong understanding of law: b/c buyer was not aware of the deal, he was not informed and was not there, whatever happed b/w seller and alternative buyer for 120K had nothing to do with being effective revocation as for the original buyer.  On other hand, if it was reasonable to consider offers #1 and 2 revoked by time lapsed, then there was no K and hence it was nothing to compensate original buyer for. Do not you see that?  distracter " for whatever reason court found for buyer” is to confuse you,  Courts find for reasons, not just because it would be nice to give money to buyer who has no K rights.

 (that is  the problem: revocation needs to be communicated: as there is no valid offer w/o communication , by the same token, there is no valid revocation w/o communication to offeree who has power of acceptance, not revoked by lapse of time or death of offeror.)

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Why it is MBE difficult question, consider this:

 

Offer#1 I give you offer to buy my house, b/c it C/L, no UCC exceptions, my offer if revocable at will, prior any time you accept it.

So forget about second sentence dealing with option. Do you agree that if I send you my acceptance prior to your effective revocation we have a K.?  If you do not agree review K formation and revocation.

Ok, in absence of selling your house, would we have a K, once you received my acceptance. Look: offer, acceptance, consideration, SFO satisfied: valid K.

 

What if you sold the house prior to receiving my acceptance, could you really do it. Yes, you could, but w/o communication of your revocation first to offeree, you risk of receiving my acceptance next day, which would form K and by not having Re to sell, you would be liable for breach because I did not know about your revocation. I had power of acceptance and I exercise it. You are bound; b/c forgot or neglected to inform me, before I tendered my acceptance. There is no defenses in K formation. If you do not have offered and accepted item, it  is your problem to pay for the breach.

 

Now, Offer # 2 was to make offer #1 30-irrevocable on receipt of $100. But offer #1 was independent, seller had right to revoke offer #1 at any time either before getting acceptance of the option (offer#2) or acceptance of offer #1 for sale of house.

But that right of revocation was exercisable by proper means of communicating to the offeree. Breached happened once seller received valid acceptance. The fact that seller had nothing to sell is irrelevant to formation of valid K.

The value of the house is on April 21 would be determined by FMV which could be estimated by value one day earlier on April 20, date of sale. In alternative court can look at the date when original buyer is ready willing and able to close escrow, and can take that date as FMV, which cold be even more then 120K, ( the rational as buyer tending full price is condition precedent for seller to tender marketable title and sellers obligation does not mature until that conditioned is satisfied. In either, case If FMV > K price, buyer gets BOB, the differences b/w FMV and K, i.e. what answer D is actually nicely states.

 

If there was no K, none of the answers is correct, b/c if no K -there is no remedy, nothing to compensate.  If there is K, remedies are either reliance, to put back buyer as if no K was ever executed, or expectation -Benefit of Bargain. None of answer is a compensation for reliance. And if there is breach buyer is entitled to BOB, not mere reliance.

 

All in all, first step to find valid K formation date first, breach date to answer correctly

“Assume, that for whatever reason court found for buyer” is red hearing -distracter to prevent you from look for K formation.