Offer and Acceptance Case No. 40 OFFER AND ACCEPTANCE DEFINITENESS S.S.I.Investo

Question

Offer and Acceptance Case No. 40 OFFER AND ACCEPTANCE DEFINITENESS S.S.I.Investors. I.td.y.Korea Tungsten Mining Con Ltd Court of Appeals 55 N.Y.2d 934, 449 N.Y.S.2d 173 (1982) FACTS: Defendant Korea Tungsten Mining Co.. Ltd. (Mining Co.) wanted to sell certain real estate it owned in midtown Manhattan. Mining Co. requested bids from interested buyers and agreed to sell to the highest bidder. Plaintiff S.S.I. Investors, Ltd. (S.S.I.) submitted a sealed bid for the purchase of Mining Co.'s real property. The bid was as follows: "The total price of Five Hundred Fifty-Six thousand dollars ($556,000.00) and/or One dollar ($1.00) more than the highest bid you have received...". The highest bid aside from S.S.I.'s was $750,000.00. Mining Co. accepted the $750,000.00 bid. S.S.I. claimed that it was the highest bidder based on its "one dollar more" bid. It brought this action for specific performance seeking a court order requiring Mining Co. to sell the property to S.S.I ISSUE: Does a bid which states a price of one dollar more than the next highest bid constitute a valid offer? DECISION: No, judgment against S.S.L. REASONING: For an offer to be valid it must be definite and certain. S.S.I's bid was too fy which alternative was intended to be the price offered. No determining modifer as "whichever is higher" was included. Further, the "one dollar more" option was to constitute a valid offer. The bid proposed two possible prices and did not some circumstances an otherwise indefinite bid can be made sufficiently definite by clerence to an external document. To determine in this case, however, that the "one dollar f id could be made definite by reference to the other bids would frustrate the process indedled bidding. The "very essence of sealed competitive bidding is the submission of ependent, self-contained bids to give effect to this or any other similar bidding indefinite te because the amount of the other bids was not known. ref tice... would be to recognize could be wholly frustrated:" ize means whereby effective sealed competitive bidding

Explanation / Answer

1) The offeror is the party who makes the offer. The offeree is the person who either accepts or does not accept the offer.

In this case, Offeror is the one who offered the highest bid, that is $750,000. S,S.I investors Ltd is also an offeror because, he offered one dollar more than the highest bidder. Korea Tungsten is the Offeree, because he is the one who had invited parties for bidding for its real estate.

2) At an auction, auctioneer is the offeror.

ln an absolute auction, the seller through the auctioneer is the offeror and the bidders are the offerees. This directly implies that seller is indirectly an offeror and auctioneer is directly an offeror. The seller who sells his asset puts that in the hands of auctioneer, and auctioneer becomes an offeror on behalf of the seller.

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