CONTRACT FORMATION – ANCHORS AWAY1.In this case, Kevin is the offeror and Jim is the offeree. Kevin is offering to sell the yacht for$750,000. On September 10th, Jim wrote a letter from Vancouver to Kevin, who lived inOakville, Ontario. In the letter was a counteroffer for Jim to purchase the yacht from Kevin for$550,000 instead of $750,000. On September 15th, Kevin receives the letter and sends Jim a faxoffering to sell the yacht for $600,000. The fax is an instantaneous form of communicationhowever, it is assumed from the case that Jim did receive it but did not respond immediately to it.On September 22nd, Jim visits Toronto for business purposes. He meets with Kevin and tries toconvince him to reduce the price of the yacht, and Kevin refuses. Jim then tells Kevin to hold offselling the yacht while he discusses the matter with the board of directors of Sporting Life. Untilthis point, there is no contract formed since both parties did not enter into a mutual agreementthrough the process of offer and acceptance. Kevin tells Jim that he will hold off the offer untilSeptember 30thsince no one was showing interest in buying the yacht at the time. In thiscommunication to Jim, Kevin has made a firm offer which means he promises to hold the offerfor a certain time, but it is not enforceable. On September 24that 11:40 a.m., Jim sends a letter toKevin agreeing to pay the $600,000. A letter is a non-instantaneous form of communication.Kevin received the letter at 4:20 p.m. on September 30thand immediately telephoned Jim to tellhim that the yacht was already sold. By that time, Kevin had entered a written contract to sell theyacht to Mark on September 27th. A contract had already come into existence between Jim and
