BUSINESS LAW
PART A
1. A contract refers to an agreement or a promise that is legally enforceable (Carter, 2006). In most cases, two parties are involved in making the agreement. For an agreement to be considered to be a contract, it must have some basic elements. The first basic element of a simple contract is offer (Allan and Hiscok). In general, terms, offer is the willingness that a party to the contract may express to certain terms of the contract. The offer is mostly made with the intention that the agreement immediately becomes binding after the offer has been accepted by the offeree (Randell-Moon, 2013). Essentially, an offer states the terms and conditions that will bind the parties to a contract if they enter the agreement. The parties must have the intention to be bound by such terms that are stated in the offer. Offer takes different forms. The bottom line, however, is whether there is a communication to either party of the intention to be bound by the rules and regulations of the contract.
In contracts, the second element is acceptance. This refers to the act on the part of the offeree that indicates that they are willing to be legally bound by the offer’s terms and conditions (Barker, 2000) . This is, therefore, similar to the acknowledgement that a party may give that they are interested to be bound by the terms of the contract. Essentially, the offer must be accepted with the same terms and conditions that were originally stated. Introducing new terms leads to a counter offer.
There must be an intention to create legal relations in a contract. The terms and conditions of a contract are legally binding. As such, parties entering a contract must have the intention that the law will guide them and that the contract can be enforced through the court process. Agreements that do not have a provision for the legal process cannot be termed as contracts, since the law cannot enforce them (Ruff, 2002).
A contract must have some form of consideration (Vermeesch and Lindgre, 1992). In essence, when a party promises another something, there must be a benefit, which is valuable that they can gain. In a contract, it is essential that both parties have some form of gain, providing the benefit for value for their participation in the contract (Doris, 2013). This is what consideration is all about. However, the value need not to be fair, as long as there is some value attached to it
2. In contract law, a promise to sell a property at some point in time amounts to a contract. The two parties, Jack and Jill, had an agreement in place to complete the transaction in which the ownership of the car would be transferred. Such agreements give rise to the unilateral contracts. In essence, such contracts arise when the owner agrees to sell a property to a potential customer at a stated price. Such agreements prohibit the seller from cancelling the agreement to sell or selling the property to a different buyer. Such contracts tend to give the prospective buyers an advantage over the sellers, since they have the option to decide whether to by the property or not to. When the two parties to a preliminary sale agreement intend to conclude a transaction, then the seller is bound by the preliminary agreement and cannot thereafter revoke the agreement. In this scenario, Jack and Jill have a contract in place. Selling the car to another person amounts to a breach of the contract and Jill can successfully sue Jack for the reach of the agreement.
3. Analyzing the events of the case, there are several issues that arise, some of which are contrary to the spirit of contracts and contract law. Important to note is the fact that gifts and promises to give a party a gift does not amount to a contract. One of the major elements of a contract is consideration (Chen-Wishart, 2005). As already argued above, consideration has the effect that both parties to a given agreement must benefit in one way, or another, that is to say, they must have some value for the agreement. Giving somebody a gift or promising to give them a gift without some form of benefit does not amount to a contract and, therefore, cannot be enforced by law (Stoljar, 1975). In this case, Joanna’s aunt had promised to give Marie the mirror. This was merely a promise, as it was not backed by some form of benefit, that is to say, it lacked consideration. Marie would, therefore, be in a difficult position to claim that she is legally entitled to own the mirror. This is because there is no law in place to support her claims. On the other hand, there is a will in place for Joanna to inherit the house and its components. In succession law, a will is a valid method of transferring property from one individual to the other (Willet, 2011). After the death of the aunt, Joanna becomes the legal owner of the house and anything that is in it. She, therefore, has exclusive rights to the access of the house and the things that are in it.
However, going by the case, Marie may argue that there was a valid contract between Joanna and her in which she would obtain the mirror for $50 instead of the market value of $5000. One rule in contract law is that a consideration only needs to be sufficient (Fuller, et at, 2007). It needs not to be adequate. Selling an item or a property at the price that is far much way below the going price is not considered as a factor that may make a contract invalid. The consideration ought not to be the market value of the commodity. As much as some benefit is gained by both parties, despite it not being adequate, a contract is created. However, this contract and transaction should be rescinded because of several reasons.
Despite the fact that Joanna and Marie had a contract in place, Joanna can attack the transaction on grounds of duress. In contract law, duress is a major defense to a transaction. Duress refers to circumstances when a person is forced to do something or engage in a transaction because some violence; pressure or threat is leveled to them. This threat may force the other party to engage in activities that they would not perform in the normal conditions. If a party to a contract can prove that they engaged in the transaction as a result of duress, then they can have a defense. In the scenario, Joanne sold the mirror cheaply because Marie threatened not to pay Peter if she did not have the mirror. This had a direct consequence to Peter’s business, which was on the verge of collapsing. This fact prompted peter to request Joann to sell the mirror cheaply to Marie. In a court of law, Joanne can have a remedy in which the contract will be rescinded because of the duress. They can thereby have the mirror back.
PART B
Our Ref: T34/04/2014
2ND APRIL 2014
KHAN AND CO. ADVOCATES
P.O BOX 5678, WASHINGTON
Dear Advocate
RE: LEGAL ADVICE ON VARIOUS ISSUES
As the CEO XYZ MOTOR REPAIRS, I am humbly writing to seek for your legal advice on a number of issues that our company is facing before we decide to take the relevant step. The issues in concern represent some of the challenges that our company is facing and some of the possible solutions that we have suggested to take.
I can authoritatively confirm that one Peter is our regular customer. In most cases, he has brought his vehicles to our garage for repair. We have always repaired them effectively, further enhancing the rapport between him and the company. Despite this cordial relationship, we have been faced some challenges that require us to make some decisions on whether to compensate him for some vandalism or not. Our position is that legally, we are not obliged to do so. However, it would be very crucial for us to get some legal insight unto the issues before we can decide on the relevant step to pursue. Kindly go through the letter to be well acquainted with the facts of the case and give a legal opinion on the right procedure that we should pursue.
On January 15th, Peter brought his car to the garage for mechanical repairs. Despite the security measures that we have employed at our garage, thieves entered the garage and stole the car’s entertainment system, which is valued at $1200. Apparently, they managed to get into the garage because I forgot to close and lock a window. This may point that we were negligent in a way, but truth is it was not intentional. However, it is not in our plans to compensate him for this loss. This is because of the terms and conditions that we have adopted and invited our prospective clients to embrace. On the bottom of the receipts that we give our clients, the terms effectively state that: ‘We regret that we cannot accept any responsibility for damage or loss caused to customers’ vehicles by fire, vandalism or otherwise howsoever caused.’ This information is also printed in our offices, effectively warning the clients that we will not take any responsibility for such losses. Peter has been our customer for around 5 years now, hence it is in good faith to assume that he is aware of our terms and conditions for service. In analyzing the above circumstances, it is our decision not to compensate him for this vandalism, since the companies terms and conditions expressly state that we shall not take any liability over the same.
The second issue is as pertains the destruction that was caused to his vehicle when I drove it to a friend’s house. Apparently, when the car was parked outside, somebody drove into it, causing damages worth $ 16,000. All attempts to identify the offender have been in futility. Our terms and conditions only apply in our place of service, that is, within our garage. Because the terms and conditions do not cover destruction caused outside our place of work, it is our decision to compensate Peter for the damages totaling $16, 000 that were caused outside our garage. We therefore write to seek for your legal opinion over the steps we want to take. It is important for us to know whether we are acting within the scope of the law. Kindly give us your advice.
..
XY
References
Carter, J. W 2006, Carter's guide to Australian contract law, Chatswood, NSW: LexisNexis.
Doris, M 2013, Promising options, dead ends and the reform of Australian contract law, Legal Studies, 45(34), 67-78.
Gooley, J., Radan, P., & Vickovich, I 2007, Principles of Australian contract law: cases and materials, Chatswood, NSW, LexisNexis Butterworths.
Randell-Moon, H 2013, The secular contract: sovereignty, secularism and law in Australia, Social Semiotics, 23(3), 352-367.
Stoljar, S. J 1975, A history of contract at common law, Canberra, Australian National University.
Willett, C 2011, The Functions of Transparency In Regulating Contract Terms, UK And Australian Approaches, International and Comparative Law Quarterly, 60(02), 355-385.
Ruff, A. R 2002, Contract law, London, Sweet & Maxwell.
Allan, D. E., & Hiscock, M. E 1987, Law of contract in Australia, North Ryde, N.S.W.: CCH Australia.
Vermeesch, R. B., & Lindgren, K. E 1992, Business law of Australia, Sydney: Butterworths.
Andrews, N 2011, Contract law, Cambridge, Cambridge University Press.
Brown, R 1991, The English doctrine of consideration in contract, Darwin: W, Hodge.
Chen-Wishart, M 2005, Contract law, Oxford, UK, Oxford University Press.
Elliott, C., & Quinn 2007, Contract law, Harlow, Pearson Longman
Barker, D 2000, Essential Australian Law, London, Routledge Cavendish Australia.
Reinecke, M. F 2002, General principles of insurance law, Durban, LexisNexis Butterworths
