The Elements of a Legal Contract That Applies to Jim and Laura Scenario
A contract refers to a voluntary agreement between two or more individuals that is enforceable by law. It is a legally binding arrangement that obliges the involved individuals to complete specific tasks. It is a promise made between the involved parties that permit the courts to make a decision. The contract formation normally needs an offer, consideration, acceptance, free consent, capacity, certainty, and mutual assent of people; two or more to be bound. The contract form might be oral, written, and by conduct. Each agreement needs to have the essential elements to be regarded as a valid contract. The agreement entails a valid offer which is a promise made by one party to do or abstain from doing a particular action in the future. It also needs to have a consideration which is something of value promised in exchange for the particular nonaction or action. Acceptance is a contract element that shows approval of the contract that can be expressed via performance, deeds, or words (Solan, 2007).
Normally, acceptance must reflect the offer terms, otherwise, the acceptance is perceived as a counteroffer and rejection. Those making the contract must be of legal capacity, meaning they are not mentally impaired, not minor, nor bankrupt, and are not prisoners. Entering a contract must also involve consent, which is the free will and effective understanding of what every involved party is doing. The consent needs to be genuine to eliminate duress, misleading conduct or misrepresentation, unconscionability or undue influence, and unfair terms of a contract in standard form contracts. Certainty is an element that assesses whether the contract is certain or complete. If uncertain there is no binding contract. Mutual assent means that the contract must be proven objectively, which is mostly demonstrated by showing offer and acceptance (Yonjan, 2019).
In this particular case, there is an offer which is purchasing the selected car, with the first step involving paying a $100 deposit to hold the car for one day, with an assurance that the money is refundable. There is also an acceptance which is shown by Jim and Laura giving the $100 deposit. There is also a consideration in this case, which is the exchange of money for a car. Those involved have the legal capacity to participate in the contract as they are mature and mentally okay. However, there is an issue with free consent and certainty. The contract was verbally done, where Jim and Laura claim to have been told that the $100 deposit was refundable, which Stan, the salesperson seems to ignore, and appears to be forcing them to take the car even after changing their mind.
This means that Jim and Laura’s acceptance was due to deception, making this contract questionable. Also, there is no clear discussion and agreement on the payment plan. The only discussed amount was the deposit, without clear agreement on any initial payment or installment payment. Moreover, this being a sale of a big asset, it cannot be done verbally. Transaction evidence and purchase agreement would be needed. The contract lacks mutual assent since what Jim and Laura thought to be part of the terms and what influences them to commit now seems to be disregarded.
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Was there a Contract for the Purchase of the Automobile?
In this particular case, the agreement seems to lack some vital elements that would make it a binding contract. Although Jim and Laura demonstrated acceptance of the offer by making a $100 deposit, it emerged that they were duped to think that the amount was refundable, if they happened to change their mind. The variation in their understanding and the salesman’s claim means that the agreement was not based on free will and certainty. Probably, with a clear understanding of terms, Jim and Laura could not have accepted the offer. Moreover, there is no proof to show that Jim and Laura made any payment to Stan’s salesperson, not even a simple receipt.
Although verbal contracts are binding, they are rarely used in huge purchases, especially in hire purchases. A written agreement with a clear payment plan, and terms under defaulting, and what transpires in breach of contract were highly needed before Jim and Laura could commit. A well-documented agreement was also needed to ensure follow-up and to ease the resolving of disputes. This means the current verbal agreement cannot be used in any court of law, especially since the parties involved seem to vary in their verbal terms of the agreement.
Facts from the Jim and Laura Scenario that Support No Contract Exists for the Purchase of the Automobile
According to the scenario, Jim and Laura went to the showroom with intention of getting a good car for their daily travel. They tested a few vehicles before settling on a blue four-door Sedan. They agreed to pay Stan Salesman $100 for the seller to hold the car for a day. The payment was without a receipt, but with a verbal guarantee that the amount will be refunded. This statement clearly shows that Jim and Laura were only giving $100 to remove the car from the market for one day, as they make a decision, after which they would come back to make the actual agreement or turn down the offer completely. There was no purchase contract as there was no clear agreement on what will happen after that one day was over.
Also, the amount was initially said to be refundable but later said to be part of the car payment. Again this was without any signed supportive document or any legally binding purchase commitment document. The lack of agreement on what $100 was meant for and change of terms shows that the salesman was deceiving Jim and Laura, and hence they made this commitment after misinformation, deception, or misinterpretation of terms, which amount to the lack of free consent in the agreement. So legally, there is no written proof (receipt) to show Jim and Laura gave $100, nor its main purpose, there were no witnesses to support each side’s claims, and there is a contradiction on the purpose of the money. Therefore, there is no binding contract (Wishnia, 2020).