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Douglas sent a letter offering to buy shares from a company at 50 pence a share. Six months later, the company accepted his offer, by which time the value of the shares had fallen to 40 pence a share. Douglas had not withdrawn the offer but refused to go through with the sale, and the company has brought an action for specific performance of the contract.
Which of the following statements best explains Douglas's legal position regarding the company's claim against him?
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The offer would no longer be open due to the nature of the subject matter of the contract, and the offer lapsed after a reasonable period of time. In Ramsgate Victoria Hotel Co v Montefiore (1866) LR 1 Ex 109, it was held that an offer to buy shares could not be accepted six months later because the offer had lapsed. Similarly, Douglas's offer to buy shares cannot be accepted after such a long delay, especially considering the fluctuation in share prices, which makes the delay unreasonable. Therefore, there was no contract, and the company's action for specific performance would be unsuccessful.
Key Point: Offers can lapse after a reasonable period of time if not accepted, especially in cases involving fluctuating markets or perishable goods. This principle ensures that contractual obligations remain fair and reflective of current market conditions.
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