Legal Environment of Business Question

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QUESTION 1
1. Ben McDonald had a farm that he was tired of operating. Fortunately for
McDonald, his land was located just outside the city limits of New Las Vegas, the
largest city in the State of Corruption. Because of New Las Vegas’s rapid growth,
the McDonald farm was a prime prospect for real estate development. So
McDonald placed an ad in a local paper to see what kind of interest there might be
in his property. The ad generated dozens of inquiries from parties interested in
buying the farm. Unfortunately, none of the developers seemed able to afford the
price McDonald was hoping to get. So McDonald decided to enter more serious
negotiations with the city of New Las Vegas, which had plenty of cash and a
reputation for not managing the city money very carefully. McDonald hoped to get
at least $400,900, so he decided he might as well start negotiations by asking for
$500,000. Orf June 1, he hand-delivered a letter to the city of New Las Vegas in
which he offered to sell his farm for $500,000 cash. The letter contained a legal
description of the farm, and it specified a closing date of July 1 for payment of the
price and delivery of a deed. It also contained the following paragraph: “I am
anxious to sell this property and have many other interested parties lined up so you
must accept by June 10 or this offer expires.”
NEKE
On June 3, the city council of New Las Vegas met in emergency session and
approved the purchase of the McDonald farm on the terms stated in McDonald’s
letter. As authorized by the Council, the Mayor of New Las Vegas, Bill Schmoke.
prepared a letter accepting McDonald’s offer. Given Schmoke’s usual relaxed
attitude toward bureaucratic matters, it took several days to get the letter in final
form. However, on June 8, Schmoke deposited the letter at the New Las Vegas
Post Office, paid the postal clerk the proper postage, and instructed the clerk to
send the letter by certified mail, return receipt requested. The letter arrived at
McDonald’s farm on June 10, and the letter carrier obtained a written receipt for it
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McDonald’s farm on June 10, and the letter carrier obtained a written receipt for it
from McDonald. This receipt was then returned to Schmoke.
Before the letter arrived, however, McDonald had been busy. On June 7, he had
been contacted by John Sludge, the President of the New Las Vegas Waste
Management Company. Sludge was interested in buying the McDonald farm for
use as a waste disposal site and McDonald concluded his prospects for a deal were
better with Sludge than with the city of New Las Vegas. Though McDonald and
Sludge had not yet reached a final agreement, on June 9, McDonald sent a
telegram to the city, which read as follows: “Offer to sell land is hereby revoked.
Have found better deal.” This telegram arrived at Mayor Schmoke’s office on the
afternoon of June 9. When the city’s acceptance letter arrived at McDonald’s farm
I
the next day, he threw it in a drawer, called Schmoke and told the Mayor, “Stop
kidding yourself. You have no deal.”
On June 15, the city of New Las Vegas filed an action against McDonald in the
local state court. The city sought an order of specific performance directing
McDonald to convey his farm to the city and enjoining McDonald from conveying
it to anyone else. Should the city’s action succeed? State the reasons for your
answer, focusing especially on what constitutes offer and acceptance.
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