June 8, 2009
I have a contract law question?
Question by Alex S:
An auctioner sells a safe for 50 dollars. The sale is without reserve and all sales final. The lock on the safe does not work, and the buyer knows this because the seller informed them of it. Buyer takes safe to locksmith, finds 22,000 dollars after locksmith unlocks it for buyer. Locksmith calls police. They go to court over who gets the money. Who should recover the money-buyer,seller, or locksmith? This was in indiana if that matters
Questions:
Was a contract formed at all in this case?
Why or why not?
An auctioner sells a safe for 50 dollars. The sale is without reserve and all sales final. The lock on the safe does not work, and the buyer knows this because the seller informed them of it. Buyer takes safe to locksmith, finds 22,000 dollars after locksmith unlocks it for buyer. Locksmith calls police. They go to court over who gets the money. Who should recover the money-buyer,seller, or locksmith? This was in indiana if that matters
Questions:
Was a contract formed at all in this case?
Why or why not?
More questions & answers:
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Comments on I have a contract law question? »
Buyer get's the money for sure but why did the locksmith call the cops? Doesn't make sense to me.
It would depend on whose money it was. Although a contract was formed, it could be found that it is void because of mistake of fact. It really depends, honestly, because courts are unpredictable about such things.
This best characterized for the buyer as a bailer-bailee relationship. The locksmith as a merchant bailer takes goods of a kind for repair, within the bailer-bailee relationship is a promise that all goods will be returned per the contract. Therefore the buyer as bailee is the true owner of the money.
Secondarily, the auctioneer would claim that he contracted for sale of a safe, not the goods within it. He cannot be classified as a merchant in kind, because he deals is various goods of varying classifications. Therefore he has a claim to the money, via the "not abandoned" theory of property. However, the courts would find that most likely the safe was sold "as-is" and therefore his claim would fail.
Finally…the locksmith would claim the money as found property. However, unless the money has a valid reward attached to it, he has no claim, which is why he called the police. If there is a reward, that serves as a unilateral contract from the original holder of title to the money to the finder of the property and the court will honor that contract above all others. The holder of original title, by issuing a reward did not properly abandon or lose the money and has the most viable claim to hold the property against all others.
Good luck on the bar exam