Monday, February 27, 2012

Rosenstock vs. Burke

Facts: Defendant Edwin Burke owned a motor yacht, known as Bronzewing, which he acquired in Australia in 1920. He wanted to sell the yacht and after several months plaintiff H. W. Elser, at the beginning of the year 1922, began negotiations with the defendant for the purchase of it. The plan of the plaintiff was to organize a yacht club and sell it afterwards the yacht for P120,000, of which P20,000 was to be retained by him as commission and the remaining P100,000 to be paid to the defendant. To be able to sell the yacht, he wanted to make a voyage on board the yacht with business men so that he could make a sale to them. But the yacht needed some repairs which in turn, plaintiff paid for because defendant had no budget for that. It has been stipulated that the plaintiff was not to pay anything for the use of the yacht. Because of the said repairs, plaintiff loaned money from the Asia Banking Corporation. Since it amounted to its maximum amount already, the bank could no longer give loans to plaintiff. Defendant now gave plaintiff the option of sale to plaintiff amounting to P80,000; P5,000 each month during the first six months and P10,000 thereafter until full payment of the price. Plaintiff in turn agreed by letter. Defendant demanded the plaintiff for performance after he accepted the offer of plaintiff for the purchase of the yacht. However, plaintiff now brings action to recover the sum of money he used for repairs of the yacht. 

Issue: Whether or not there was a valid contract of sale which is binding against plaintiff as used in the letter of offer which was accepted by the defendant. 

Held: The Supreme Court held that it was not a valid contract of sale. The words used by plaintiff could not be interpreted as a definite offer to purchase the yacht, but simply a position to deliberate whether or not he would purchase the yacht. It was but a mere invitation to a proposal being made to him, which might be accepted by him or not. He used such words as, “I am in position and am willing to entertain the purchase of the yacht.” not “I want to buy the yacht.” Furthermore, the plaintiff wanted to organize a yacht club and the only thing he wanted from defendant was he sells it so that he could profit from it if he re-sells it. The letter of the plaintiff not containing a definite offer but a mere invitation to an offer being made to him. Plaintiff is bound to pay the amount of the repairs of the yacht in exchange for the use thereof. 


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