On Friday, Lee offers to sell Luke a piece of very rare pottery in excellent and complete condition. Luke is a collector and hearing that the pot is a Chang dynasty piece offers Lee £15,000 for the pot. Lee and Luke exchange a written agreement for the pot. Luke knows that he will be able to sell the piece for £30,000 to another collector he knows in France, so Luke spends £200 organising freight transport for thepiece to be safely delivered to Europe. Lee returns home to collect the pot and discovers that on Wednesday that week, the family dog had knocked over the table on which the pot had been standing causing the pot to fall and smash into tiny pieces. Lee contacts Luke and tells him of the accident. Luke is furious and tells Lee that ‘he has already spent money on the deal and will sue’.
(a) Do Lee and Luke have a binding agreement under the law of contract and what is the status of their agreement? Explain your answer with reference to case law where necessary. (6 marks)