The law plays an imperative role in society because it serves as a control tool for nations. It provides appropriate rules and regulations that dictate required behavior among citizens of a country while maintaining an equal practice of power within the three arms of government (Markovits, 2020). Republics are governed by laws, which are all contained in the constitution. Countries create constitutions to ensure that people live in peace and harmony by respecting the law and enjoying legal rights. Laws hold people accountable for their wrongdoings and redeem the people who have been wrongly accused of crimes they did not commit. Law is a broad subject, as it entails different laws within itself. For instance, employment law, criminal law, tort law, administrative law, and contract law, among others (Markovits, 2020). This paper seeks to discuss various elements of contract law by using a case scenario.
The case scenario under discussion involves a conflict between a salesman and two customers (Jim and Laura). The salesman, Stan, claims that Jim and Laura made are contractually required to pay the rest of the money on a car they wanted to purchase. Jim and Laura made a deposit, but no sign indicated any legal agreement between them and the salesman. As a business law student asked to advise Jim and Laura, I would present my argument as illustrated below.
Elements of a Legal Contract
A legal contract is an agreement between two parties, it directs the rights and responsibilities between each of these parties. There are many type of legal contracts but this article will mainly focus on business contracts. Therefore, legal business contracts commonly involve exchanging money, products, services, or a promise to deliver any of these items. A contract is legally enforceable if it meets a set of specific legal requirements.
From the case scenario in context, Jim and Laura agreed to give Stan the salesman a deposit of $100. Stan accepted the money, but he did not provide the customers with a receipt. Also, the case study reveals that Stan guaranteed Jim and Laura that their $100 car deposit was refundable in case they altered their initial decision to purchase the car. Jim and Laura realized that spending $400 each month for the car payment was beyond their budget. As a result, they informed Stan that they no longer wanted to buy the car. Instead, they requested a refund of their initial investment. Stan insisted that the $100 was a deposit, so Jim and Laura had no option but to continue payments for the car, as they had already begun the purchase.
For this case, the elements of the contract in question depend on whether one categorizes it as a general legal contract or a sales contract. If the case is treated as a general legal contract, the elements include an offer, acceptance, consideration, contractual intention, and form (Markovits, 2020). Jim and Laura showed interest in buying a car and even did a drive-test on several cars to see the best fit for them, and they found one. Jim and Laura went ahead and paid $100 to express their willingness to purchase the automobile. Choosing a car and making the first deposit illustrates that Jim and Laura offered Stan.
On the other hand, Stan accepted the $100; hence, the agreement between these two parties was present. Consideration refers to something valuable that one party gives to another concerning a promise made. Therefore, a promise is only legally enforceable if there is a consideration. Jim and Laura gave Stan the $100 deposit for the case at hand, insinuating that Stan should hold the car for them for a day. By doing so, Jim and Laura promised Stan by conduct. However, there was no contractual intention within the agreement between the buyers and sellers of the automobile. The contract form was purely oral because there were no written statements about the agreement between either Jim, Laura, or Stan.
Since this case involves the sale of a car, it falls under the category of a sales contract. The elements of a sales contract entail; dual parties, goods/services, and the transfer of ownership/delivery of services (Legay, 2020). The two parties of a sales contract are the buyer and the seller. Jim and Laura represent the buyer, and Stan represents the seller. The good/item of sale within the deal was the car for which Jim and Laura paid a deposit. Stan did not make the transfer of ownership because Jim and Laura informed him that they would not submit a day for the delivery of the car as they no longer wanted to continue with the purchase.
Facts to Prove the Presence/Absence of a Contract for the Sale of the Automobile
Most of the legal contract elements were present in the agreement between Laura, Jim, and Stan. However, there is no legal contract between the two parties because some critical features, which ought to deem a contract legally binding, are missing within the agreement. For instance, while it is true that Jim and Laura made an offer to Stan, and Stan accepted the offer, there is no evidence to prove that an offer was either made or received. Stan would have had the upper hand in the case, but only if he printed a receipt to show a deposit made by Jim and Laura. If Stan accepted the $100 as a deposit, a receipt would indicate that the buyers promised to pay money for the automobile and had started making payments. Therefore, the $100 deposit cannot be termed as the consideration because of the absence of a receipt. Moreover, Stan did not ask Jim and Laura to sign any documents. The omission of these two processes eliminates the element of contractual intention.
Nothing within the discussion between Jim, Laura, and Stan insinuated a legal contract between them. Besides, Stan assured the buyers that the $100 deposit was refundable. The form of agreement between these three was oral. As much as verbal contracts are legally binding, there must be a third party present, of which there was none. Also, as per the sales agreement, there was no car ownership exchange (Legay, 2020). In the case scenario, the buyer and seller’s deal did not discuss delivery of the whole amount of the consideration as promised or the subsequent exchange of ownership for the automobile.
In conclusion, Jim and Laura did not legally purchase the car because there is no evidence indicating they did so. Stan, the salesman, made a mistake by failing to make the agreement between him and his customers legally abiding. He should have printed a receipt for Jim and Laura to indicate a partial consideration made. Doing so would prove that the buyers made an offer, Stan accepted it, and the payment for the car had commenced. Also, Stan should have asked Jim and Laura to sign some papers to ensure some contractual intention. Since Stan did none of these, he is legally required to refund the $100 to Jim and Laura.
Legay, Y. (2020). What are the essential elements needed for the contract of sale to be formed? A comparative study of legal regulation in terms of the conclusion of the sales contract under the continental and common law legal systems focuses on the legislation of Latvia, Germany, Russia, and the United States of America.
Markovits, D. (2020). Contract as collaboration. Research Handbook on Private Law Theory.