Question
Read the following case and answer the questions that follow.
Make sure your answers are clear, brief, and are supported with provisions of the law or case laws.
Facts.
After the death of its owner, Drive in Cinema decided to abandon its former business and convert the cinema building into a five-star, luxury resort hotel and casino. Drive in Cinema ran an advertisement in the Citizen Gazette on January 1 inviting contractors to submit their bids for retrofitting the Drive in Cinema building to include hotel rooms, slot machines, and plenty of card tables.
Numerous companies submitted bids to Drive In Cinema, including Ohio Ltd. After several weeks of research (at a cost of $500,000), Ohio prepared construction plans (the Ohio Plans) to convert the Drive In Cinema Building into a luxury resort hotel and casino, and, on January 20, submitted its plans and the following bid:
Dear Drive In Cinema,
Per your January 1 advertisement, please find enclosed our bid and plans to convert the Drive In Cinema building into a luxury resort hotel and casino. We can complete all of the work for $9,000,000, and will require that you pay us in three equal installments of $3,000,000 each, the first installment due immediately upon accepting our bid, the second due 90 days after accepting our bid, and the last due upon completion of the project 180 days after accepting our bid. We promise to leave this offer open until March 1.
Yours,
Johnson Barke
CEO, Ohio Ltd.
On February 1, Drive In Cinema sent off the following telegram to Ohio:
Johnson,
We are pleased to accept your bid of $9,000,000. We will immediately review your plans and notify you by February 15.
Yours
Peter
Drive In Cinema
Drive in Cinema paid an engineering firm $75,000 to examine the structural integrity of the Ohio Plans. On February 10, the engineering firm notified Drive In Cinema that the Ohio Plans were structurally sound and up to CRB Building Code standards.
On February 11, Drive In Cinema began drafting a letter notifying Ohio of the engineering firms approval of its plans when the phone rang. Drive In Cinema answered and was notified by Johnson that Ohio would no longer be able to undertake the Drive in Cinema construction project because it had just agreed to build a hotel and casino on the planet of New World Cinema
Instead, Drive in Cinema decided to re-open the bidding process, but they were relatively happy with the Ohio Plans. Therefore, on February 15, Drive In Cinema took out another large advertisement in the ERB Gazette, publishing the Ohio Plans and insisting that any bids submitted conform to, and implement, the Ohio Plans.
Reno in Space (Reno), which originally submitted a losing bid of $12,000,000 in response to the January 1 advertisement, submitted a bid of $10,000,000 in response to the February 15 advertisement. Although the bid implemented the Ohio Plans, Reno informed the Drive In Cinema that it would not be able to complete the project in the 180 days originally specified by Ohio, but would require at least 270 days. Drive In Cinema accepted Renos bid.
Using the above facts and in reference to the Law of Contract Act, Cap. 345 and Case precedents on this matter, Discuss the following.
1.Drive in Cinemas rights against Ohio, and Ohio rights against Drive In Cinema.
2.Whether the advertisement was an offer and why?
3.Whether the 20th January bid was an irrevocable offer and why?
4.Whether there was acceptance and revocation
5.Whether remedies, and if so which ones, are available
6.Assuming Ohio or Drive in Cinema want to sue for damages, which court would have jurisdiction to entertain this case
7.Whether there was an intention to create legal relation between Drive In and Ohio, Drive in and Reno.
8.Did the three companies have a capacity to contract?
9.In what circumstances can a company lose its capacity to contract?
10.When is the communication of acceptance complete as against the offeror?
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