Jim and Laura intend to buy a car, and upon visiting a dealer, they agree to give $100 deposit to hold the vehicle for a day. However, Jim and Laura later change their minds on purchasing the car upon which the dealer insists that the $100 deposit was meant to be part of the contract to purchase the car. The case raises important issues with regard to contract law. Therefore, before analyzing the facts of the case, it is essential to evaluate the various aspects that constitute a legally binding contract.
An essential element of a legally binding contract is that there must be mutual understanding between the parties involved in the process. For the case of a written contract, none of the parties involved will be assumed not to have understood the terms and conditions of the contract prior to signing and in the event of a dispute, judicial bodies will interpret the contract based on the actual contents of the contract. However, for this to be valid, both parties must have the capacity to enter into a legally binding contract in terms of both the legal age and mental capacity.
The other aspect of a legally enforceable contract is an offer. An offer can be defined as the intent by one of the parties to enter into a bargain with the other party, provided the other party has already provided consent for the same. With regard to an offer, aspects such as the price and the timelines for payment are set and agreed upon by both parties. In its abstract sense, an offer should contain enough information that would make it possible for a court of law to adjudicate in the event that one of the parties feels the contract has been breached. It is for these reasons that even oral contracts are legally acceptable; written contracts are preferred since they provide much more information.
Acceptance is also an important element of a contract. The offer made will by law cease to be binding after the period agreed upon by both parties for consideration has elapsed. However, of importance for the Jim and Laura case is whether an attempt to change the terms of the offer constitutes a lack of acceptance. According to the Texas State Comptroller (2016), any attempt to change the terms of an offer by either party should automatically result in rejection of the offer hence a lack of acceptance. In this case, the other party can only make a counteroffer rather than enforce the contract.
Consideration is also a crucial element of a contract. It implies that something of value has been given in exchange for another substance of value, service or performance. In often cases, both parties must give consideration even though courts do not give it undue importance unless there is an allegation of wrongdoing.
Consequently, it is critical to evaluate instances under which wrongdoing may be due hence leading to the termination of a contract. In the event of a mutual mistake, the contract cannot be enforceable. Secondly, in the event of fraud, the contract (whether written or implied) is held to be null and void.
One of the important facts of the case is whether or not the nature of the agreement involved real property. Under the statute of frauds, an agreement involving the transfer of real property must be in written format (American Bar Association, 2015). However, a car only qualifies as personal property and as such an oral agreement can as well suffice in prosecuting the case.
However, for the case of Jim and Laura, the primary bone of contention is whether or not there was acceptance. The Texas State Comptroller (2016) holds that acceptance must take place within a defined period. In this regard, there are no facts to suggest that the acceptance period had lapsed. However, the critical aspect is that Jim and Laura had already changed their mind. Any attempted changes to the terms of the offer constitute a rejection of the agreement hence not enforceable, and the only recourse would be to make a counteroffer (Texas State Comptroller, 2016).
It, therefore, raises the issue of whether or not a complete rejection of the terms of the offer, as was the case by Jim and Laura, results in the termination of the contract. Evaluating the letter and spirit of acceptance as an aspect of a contract law implies that Jim and Laura had in essence rejected the offer and as such Stan cannot purport to have entered into a legally binding agreement with the two.
However, assuming that there was an acceptance and indeed consideration, the fact remains that no contract had been entered into by the two parties. First, a contract is considered null and void in the event that there is a mutual mistake by the two parties. Failure to issue Jim and Laura with a receipt constitutes a mutual mistake.
Secondly, the contract cannot be legally enforceable since it might be held to be a fraud. Fraud entails intentional misrepresentation of an important issue in an agreement. Stan, the salesman, misrepresents the $100 deposit as merely a refundable fee to enable the two hold and test the vehicle overnight.
Stan also gives them a guarantee that the amount is refundable. In a legally binding agreement, once consideration has been given by both parties, and an item of value exchanged, money is not refundable unless there is breach of contract hence by the fact that there was a guarantee the amount is refundable, it implies that the same amount was not in lieu of offsetting the part of the car’s price. It is, therefore, the case that Jim and Laura did not purchase the car.
References
American Bar Association (2015). Contracts and consumer law. Americanbar.org Retrieved
http://www.americanbar.org/content/dam/aba/migrated/publiced/practical/books/
family/chapter_9.authcheckdam.pdf
Texas State Comptroller (2016). Legal elements of a contract. Texas.gov Retrieved January 26,
2017 from
http://comptroller.texas.gov/procurement/pub/contractguide/LegalElementsofaContract.p
df
