Debbie has come to our office seeking legal advice as to several contract issues involving the purchase and sale of rare stamps, and specifically whether she has any possible causes of action and/or remedies against Bob and/or Alan, who are among the parties involved in the proposed transaction, be it for breach of contract, unjust enrichment, otherwise. A contract requires certain elements, including offer, acceptance, and consideration. There has to be a meeting of minds between the parties, and they have to have fully contemplated the terms and conditions of the deal. When one party makes and offer and that offer is refused, there is no agreement. Likewise, when a counteroffer is made and there is no acceptance of said counteroffer, and/or consideration in support of same, there is no contractual obligation.
In cases where an offer is made to one party, and another party attempts to reap the benefit of the original offer (not having been a party to the same), there is no contractual relationship. However, in the instance where one party has agreed to perform for another in consideration for certain actions to take place, e.g., a commission being paid, or a sale going through, and it does not, the person upon whom a benefit is conferred without the resulting action occurring, is said to have been unjustly enriched. In certain circumstances of this nature, the proper remedy is disgorgement, or restitution, whereby the parties are ordered back to the position that they were in prior to any promises being made or any benefit being conferred.
In this case Alan has offered to purchase a stamp from Bob for $500. Bob has rejected the offer and countered, in writing to Alan, stating that he will sell the stamp for $8,000 if he receives the money in person by July 1st. There is no indication of whether Alan responded in any way, prior to informing Debbie about Bob’s offer to sell the stamp for $8,000. Alan does not have enough money to buy the stamp himself and instead, Debbie agrees to buy it for the $8,000 and gives Alan $1,000 for his efforts. Debbie appears in person on July 1st and Bob refuses to sell the stamp.
Based upon the foregoing, Debbie does not have a cause of action against Bob. There is no contractual privity between the Bob and Debbie, there was no offer, acceptance or consideration that passed between to the two of them, there was no meeting of the minds as to the purchase and sale of the stamp, and Bob has done nothing to place Debbie in a worse position that before she appeared before him on July 1st and tried unsuccessfully to purchase a stamp. As to Alan, while there was no formal contract, there appears to be an agreement between him and Debbie concerning Bob’s stamp. Based upon the facts as we understand them, there was consideration that passed—the $1,000 that Debbie gave to Alan, which we believe to be a finder’s fee or some form of commission for finding this deal on her behalf. To the extent that this is indeed what the parties intended, that Debbie would stand in Alan’s shoes and buy the stamp and that Alan would collect $1,000 for turning her on to the deal, Alan has been unjustly enriched.
There was no contract to be breached between Bob and Debbie, and she has no basis to force the sale of the stamp for $8,000, but realistically, Alan was enriched by $1,000 for presumably inducing Debbie to take action upon Bob’s offer. Debbie was harmed by the offer not going through and arguably should not have to suffer the $1,000 loss, Alan can argue that he had no control over Bob’s decision to sell or not to sell, but clearly he did nothing to “earn” the $1,000 from Debbie, and she derived no benefit whatsoever.
To the extent that Debbie can show that she detrimentally relied upon Alan’s representations about the stamp, and that she acted in reliance upon such representation, and is now out $1,000 with nothing to show for it, Debbie probably has a reasonable demand that she be restored to her original position, and that Alan return the $1,000 to her.