JIM AND LAURA 1
DidJim and Laura Buy a Car?
A legal contract is formed upon the cornerstone of five fundamentalelements. These aspects include offer, acceptance, consideration,mutuality of obligation, and competency and capacity (Burton, 2009).The case involving Jim, Laura, and Stan Salesman can be examinedusing these five elements so as to determine whether a legal contractexists. It is noteworthy to mention that the fact that no documentswere signed does not preclude the existence of a binding contract.Also, the arrangement between the couple and the car salesman was alegally acceptable activity.
An offer refers to a promise made to act in exchange for the otherparty performing a particular action. The offerer has to use definiteand certain terms in his communication to the offeree (Elliott &Quinn, 2015). Jim and Laura had given Stan Salesman $100 to hold thecar for a day. The parties had agreed that the money would berefunded if Jim and Laura elected not to purchase the blue 4-doorsedan. Jim and Laura did not use certain and definite terms tocommunicate their purpose of buying the car. Therefore, it cannot besaid that they had made an offer to purchase the vehicle.
Legal offers are distinguished from preliminary negotiations due tothe lack of present intent (Burton, 2009). The local car dealershiphad not made any advertisements concerning the car. In this respect,any prospective client would be making a legal offer rather than apreliminary negotiation. Offers that are neither revoked nor rejectedremain active until the time limit is exceeded. Jim and Laura hadrequested Stan to hold the car for a day. Therefore, any perceivedarrangement would be valid for a day.
Acceptance refers to when the offeree assents to the terms of theoffer. For the acceptance to be valid, it has to be in strict harmonywith the stipulated terms and conditions. Also, the offeree has tounderstand the full implications of the offer and also manifest anunequivocal intention to accept the offer (McKendrick, 2015). Jim andLaura were not aware that the deposit would be construed as beingpart of the sales price. They had strictly instructed the salesmanthat the money was meant for him to hold the car for a day. In fact,Stan had agreed to refund the money in case Jim and Laura decided notto purchase the blue sedan. Since the element of acceptance wasunfulfilled, a binding contract does not exist between the parties.
Consideration requires both parties to provide something valuablethat would entice the other party to enter into a contract. The valuethat leads to the formulation of a contract could be money,agreement, effort, or a promise to fulfill an obligation (Elliott &Quinn, 2015). Jim and Laura were motivated by Stan’s promise tohold the car for a day. On the other hand, Stan was drawn by the hopethat Jim and Laura would decide to purchase the car. Nevertheless,the consideration that convinced Stan to accept the deposit wasfounded on wrong assumptions. Therefore, a legal contractauthenticating the purchase does not exist.
Mutuality of obligation makes it mandatory for both parties to sufferlegal detriment in discharging their obligations as stipulated by thecontract (Burton, 2009). In this respect, none of the parties shouldexercise absolute power to revoke the contract. Mutuality ofobligation is adjudged to exist where the parties have limited rightto invalidate the contract contingent on some external factor(Burton, 2009). Jim and Laura had absolute power to end theirarrangement with Stan since the money was refundable. Jim and Laurawere reluctant to buy the sedan since they did not want to spend morethan $400 monthly on car payments. However, this condition wasunknown to Stan. The agreement between the two parties was notcontingent on any external factor. Furthermore, Stan showed hisrealization for this fact through his decision not to write anofficial receipt. Since Jim and Laura had the absolute capability toget a refund, there was no contract for the purchase of theautomobile.
The competence and capacity of a person refers to the characteristicsthat make them qualified to enter a contract (McKendrick, 2015). Forexample, a minor below the age of 21 is deemed as too naïve andimmature to negotiate and enter into binding contracts. Also,intoxicated and mentally incapacitated individuals lack the legalcapacity and competence to form a contract (McKendrick, 2015). Jim,Laura, and Stan were mature adults with competent mental faculties.This can be established from the fact that Jim and Laura werequalified drivers with valid licenses. Also, Stan must have been anadult since he was legally permitted to work as a salesman at the cardealership. Therefore, the competence of both parties would seem tosupport the existence of a contract.
A consideration of the five elements reveals that there was nocontract validating the purchase of the blue sedan. Jim and Laura hadnot used definite terms to make an offer to purchase the vehicle.Although the parties were legally competent to form a contract, Jimand Laura had absolute rights to invalidate the contract. Unbeknownstto Jim and Laura, the salesman chose to view the deposit as part ofthe car’s purchase price. Therefore, there was no contract for thepurchase of the automobile.
Burton, S. J. (2009). Elements of contract interpretation. NewYork, N.Y.: Oxford University Press.
Elliott, C. & Quinn, F. (2015). Contract law. Boston,Mass.: Pearson.
McKendrick, E. (2015). Contract law. London, U.K.: Palgrave.