On May 2, Brand Name Industries (BNI) sent Carol a letter via overnight delivery

Question

On May 2, Brand Name Industries (BNI) sent Carol a letter via overnight delivery offering to employ her to audit BNI’s financial statements for the current year for $1000. In the letter, BNI stated that Carol had ten days to accept. On May 5, Carol sent BNI a fax stating, “The price for the audit seems too low. Would you consider paying $1200?” BNI received the fax. The next day, Dan offered to conduct the audit for $800. On learning of Dan’s offer, Carol immediately e-mailed BNI agreeing to do the work for $1000. BNI received this e-mail on May 7.

Explanation / Answer

BNI and Carol both the parties have no contract. Carol rejected BNI's original offer of $1,000 and instead made a counter-offer. A counter-offer kills the original offer. As such she never accepted the first offer. BNI never responded to her counter-offer and thus never accepted. Her agreeing to do the work for $1000 was another counter-offer made to BNI. BNI are not contractually obliged to either Dan or Carol on the facts provided as they have not accepted either offer made.

Although it won't be accepted in court, Carol could try to argue that BNI never withdrew their original offer and as she had complied with the terms of acceptance they did have a contract. However once again this wouldn't hold up due to the fact that she made a counter-offer.

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