Business Law Verbal Contracts: Did Jim and Laura Buy a Car?
Did Jim and Laura Buy a Car?
Worth 200 points
HINT: See Chapters 10-14 of the text to help understand some of the legal issues covered in this assignment.
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.
In three to five (3-5) pages, advise Jim and Laura based on the above facts as presented, the material provided in the text, and material covered in the lecture. In your paper, be sure to address the following:
1.Define the elements of a legal contract using examples from the scenario where applicable.
2.Decide whether or not there was a contract for the purchase of the automobile.
3.Identify the facts from the scenario which support your decision on whether or not a contract exists for the purchase of the automobile.
4.Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as quality academic resources.
5.Format your assignment according to the following formatting requirements:
Typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page is not included in the required page length.
Include a reference page. Use APA format. The reference page is not included in the required page length.
Verbal contracts
(Author’s name)
(Institutional Affiliation)
Any agreement between two or more parties must contain certain essential elements for it to be recognized as a contract (Friedman, 2011). There are four elements that make up a contract that are apparent in the case between Jim, Laura and Stan the salesman. First, Jim and Laura had made an offer to pay a deposit of $100 for the Blue Sedan. For an agreement to be regarded as a contract, the offer must be clearly defined although it lapses once the acceptance time has expired. Acceptance is the second essential element that makes a contract that is apparent in this case. Stan, the salesman, accepted Jim and Laura offer of $100 as a deposit. The salesperson did not object to Jim and Laura offer and instead accepted their $100 payment that was not documented. In additional, both parties (clients and salesperson) had agreed that the deposit was refundable. An acceptance does not necessarily require to be documented; it can be verbal or concluded through an action.
Thirdly, the parties have an intention for the agreement to be legally enforceable (Friedman, 2011). This is the case since they did not mention anywhere that they have no intention to be legally bound. Lastly, for a business contract to be legally binding a consideration must be provided by each of the parties. One of the parties can promise to deliver an item while the other party offers an item of value (monetary consideration). In most cases, consideration is usually a monetary payment made to the other party for the promise made by the other party. Jim and Laura provided a financial consideration of $100 to Stan for a promise of holding the car for a day. The payment does not necessarily to be fair; the client can bargain for a lower payment.
Enforceability
Jim and Laura had a verbal agreement with Stan the salesman to purchase the Blue Sedan. The agreement was reasonable and was made in good faith (Weber & Mayer, 2011). Therefore, it could be considered binding and valid. The verbal agreement meets all the mentioned elements, and it, therefore, can be considered as a purchase contract. Although purchase agreements are mostly followed by documentations signed by both parties, the law requires only a few types of contract to be strictly documented (Weber & Mayer, 2011). Verbal agreements are often present a couple of difficulties associated with their enforcement. Written contracts are readi...