Business Contract – The Case of Johnny And Mark

The Case of Johnny And Mark

Johnny, a neighbor who is not a merchant under the Uniform Commercial Code, offers to buy a car from Mark for $30,000.   Mark asks Johnny for some time to think about it. Johnny says sure. He writes on a piece of paper that he will keep the offer open for two weeks.  

A week later Johnny sees another car he would rather buy. He purchases that, and then he tells Mark that he is revoking his offer. 

Two days after that Mark said: “I’m sorry Johnny you made an offer in writing to buy my car. I’m going to hold you to that.”   

Johnny replied: “Sorry I cannot do that.  But I will promise to pay you $10,000 for the help you gave me last year around the house.”   Somewhat mollified Mark accepts. 

A week later and Johnny decided to renege on that promise as well. 

Fed up, Mark sued Johnny for breach of contract on both the promise to buy the car and the promise for the $10,000.

Discuss whether the elements of a contract are satisfied in this case.

Breach of Contract – The Case of Johnny And Mark

A contract can be defined as an agreement between two or more people, which must be enforceable legally (Renouf, 2008). When two or more parties enter into a contract, it must satisfy a number of elements if such a contract is to be valid and enforceable in the court of law. A valid contract must consist of an offer, consideration, legal capacity and unconditional acceptance (Stone & Richard, 2009). The following is an analysis of the elements of the contract between Johnny and Mark.

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The Elements of a Contract in the Case

A valid contract must consist of an offer being made and an unconditional acceptance of the same. This should be done with good faith and without any intimidation or deceit. An offer occurs when an individual makes a promise to provide a service or to sell/buy a service/product/property (Stone & Richard, 2009). In the Case of Johnny and Mark, an offer was made when Johnny offered to buy a car from Mark for $30,000. In return, Mark made a conditional promise to consider the offer within two weeks and kept it in writing while noting that he would keep the offer open for two weeks. The fact that Mark offered to consider Johnny’s offer is conditional and does not constitute an element of a valid contract.

Read also Essential Elements Of An Enforceable Contract – Answered

However, according to the Uniform Commercial Code (USLegal, 2004), any contracts that are meant for sale or purchase of goods/services worth over $500 must be made in writing to be enforceable. In the case, it is stated that Johnny is not a merchant. Therefore, under the Uniform Commercial Code he is not obliged to provide in writing any failure to meet his obligation in the part of the contract agreement with Mark. The element of the Uniform Commercial Law in the contract between Mark and Johnny does exist.

The other element that is present in the contract between Johnny and Mark is the legal consideration. According to (Stone & Richard, 2009), a valid contract must have a consideration or benefit given to the other party in the contract. The consideration is a benefit that the person who accepts the offer or detriment on the person making the promise. In most contracts, the consideration is money, while in some cases it can be goods or services. In the case provided, the consideration is the $30, 0000 that was to be paid by Johnny for the Mark’s car.

Similarly, the element of legal capacity is present in the contract between Johnny and Mark. According to (Stone & Richard, 2009), a contract is deemed valid if it does not violate any state or federal law of what is defined as a legal activity. The author points that a contract between two parties that is done with an intention of creating harm or stealing is void. In the case provided, Johnny and Mark entered into a contract that involves the sale of a car. Assuming that Mark was the owner of the car, the contract has a legal capacity and is valid.

In addition to the above elements, a contract is said to be done if it is done between parties without use of threats or with an individual who is insane or has no clear capacity to make judgement. In some cases, parties may agree to offer some incentives or gifts during the contract negotiation. However, according to (Stone & Richard, 2009), other benefits and gifts that are given other than the consideration does not form part of a legally binding contract. In the case provided, the promise by Johnny to pay Mark $10,000 for the help offered constitute a gift and is not legally binding in contract.

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In conclusion, there are numerous elements of contracts that can be observed in the case. The contract has an offer, consideration and legal capacity. Moreover, the contract was done in a willful manner between two parties who were in their sound states of minds. However, the contract lacks unconditional acceptance of the offer. Mark gave Johnny a condition that his offer would be considered after some time.

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