Elements of a Legal Contract
SCENARIO: Jim and Laura Buyer visit the local car dealership because they are interested in buying a new car. The car they currently have is aging and is starting to have mechanical problems. Jim and Laura would share the new car, and use it to go back and forth to work and school. Before going to the dealership, Jim and Laura decide that they can only afford $400.00 a month in car payments.
Once at the car dealership, Jim and Laura meet Stan Salesman. Stan shows them several vehicles and Jim and Laura test-drive several of the cars. Jim and Laura particularly like the blue 4-door sedan. Therefore, they agree to give Stan Salesman a $100.00 deposit to hold the car for a day. Stan Salesman does not give them the receipt but guarantees that the $100.00 is refundable. No documents were signed.
The next day, Stan Salesman calls Jim and Laura to ask them when they would like to take delivery of the car. Jim and Laura, on the way home from the dealership, decided that they were not going to buy the car because they did not want to spend that money each month. Therefore, Jim and Laura tell Stan Salesman that they have decided not to buy the car and request their $100.00 deposit back.
Stan insists that the $100.00 was a deposit on the car and was meant to be part of the contract to buy the car. Stan is very persistent and insistent that Jim and Laura have contracted to buy the car; therefore, the $100.00 will be applied to the purchase price of the car. Jim and Laura are shocked and angry as not only do they not want to spend the money, but now feel as though they are being duped by Stan Salesman.
Jim and Laura have an appointment to see a lawyer in a few days, but know you are a student taking a business law class and come to you for advice. They are very frazzled, and understandably upset that they may have just purchased a car. Since you have been taking business law, you have read and understand the elements of a contract and the defenses to a contract. Therefore, although you are not a lawyer, you provide some basic advice from what you’ve learned in your business law class.
ASSIGNMENT: In three to five (3-5) pages, advise Jim and Laura based on the above facts as presented and the material covered in the lessons. In your paper, be sure to address the following:
-Define the elements of a legal contract using examples from the scenario where applicable.
-Decide whether or not there was a contract for the purchase of the automobile.
-Identify the facts from the scenario which support your decision on whether or not a contract exists --for the purchase of the automobile.
-Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other websites do not qualify as quality academic resources.
In order to foster learning and growth, all essays you submit must be newly written specifically for this course. Any recycled work will be sent back with a 0, and you will be given one attempt to redo the touchstone.
Did Jim and Laura Buy a Car?
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Did Jim and Laura Buy a Car?
A contract is a binding agreement between two or more parties that creates obligations that each party must legally uphold. Several elements must be met for a contract to be considered legal. These elements include an offer, acceptance, consideration, legal binding agreement, Mutuality of Obligation, capacity, and legality (Governatori, 2018). This paper, therefore, presents a case study on the understanding of the law when a contract is made between two or more parties.
First, there must be an offer made by one party, which can be verbal or written, depending on the scenario. The offer in this scenario is for the purchase of a car, including the car’s price, the car, the model of the car, and the date of purchase (Governatori, 2018). The offer is for a specific car and is not transferable to another car. The offer is also not contingent on any other conditions. In this scenario, Jim and Laura choose the blue 4-door sedan. This is after test driving several cars. The car prices are identified, and Jim and Laura offer Stan Salesman 100 dollars as a deposit for the car. Secondly, acceptance is an essential element of a legal contract as it signifies that the parties to the contract have agreed to the terms and conditions of the contract (Belinfanti, 2017). In this scenario, the acceptance by Jim and Laura is to give a deposit of $100 for the car they intend to buy, showing the contract’s start.
Third, consideration must be described as something of value that the parties exchange. In most cases, this consideration could be the application fee paid by the applicant. Consideration is essential to a legal contract as it helps establish its value and the party’s rights and obligations (Belinfanti, 2017). In the scenario provided, the consideration would help establish the contract’s value and the terms of the agreement. For example, if the contract were for the sale of a car, the consideration would help to determine the price of the car and the terms of the sale. Fourth, there must be an intention to create a legally binding agreement. This element means that both parties must agree to the terms of the contract and intend to uphold their end of the bargain. This agreement is what makes the contract enforceable in a court of law. In this scenario, Jim and Laura agree to pay $400 for the car at the end of each month after paying a deposit of $100.
Fifth, the Mutuality of Obligation is described when both parties agree to fulfill their respective obligations under the contract (Belinfanti, 2017). The Mutuality of Obligation is an essential element of contract law because it ensures that its terms bind both parties to the contract. If one party breaches the contract, the other party can s...