Did Jim and Laura Buy a New Car
Business
Did Jim and Laura Buy a New Car
The case recalls Jim and Laura as the complainants against Stan who is a car salesman claiming that the couple had entered into an agreement to purchase the 4-door blue Sedan by depositing $100. The facts of the case show that Jim and Laura visited the car dealership where Stan is an attending salesman who accommodated the former. Jim and Laura was interested about the blue 4-door sedan, and decided to give Stan $100 for the purpose of holding the unit for a day while still on the process of finalizing the decision. It is a fact from the case that Stan accepted the terms of the agreement verbally, and did not issue any particular documentation for the deposit. Instead, Stan gave Jim and Laura an assurance that the deposited amount is refundable assuming that the latter decided not to proceed. On the way home, the couple decided not to continue with the purchase given the assumed difficulty of paying the $400 monthly amortization. However, Stan called Jim and Laura asking when they want the vehicle to be delivered, but when the couple stated their decision to cancel; Stan insisted not to refund the deposit insisting that the amount was meant to be part of the purchase contract. In this situation, the main legal issue to clarify is whether or not the couple had entered into a contract, and if they have actually purchased the car.
In order to shed light into the described case, it is important to determine what makes a contract legal and the elements that render a contract enforceable. In the given case, the contract in question is a sales contract considering the nature of the circumstances where both parties are in the process of making an exchange of value where Stan assumes the role of the seller while Jim and Laura assumes the role of the buyer. In a buyer-seller relationship, an agreement entered into by both parties’ falls under the category of sales contract. There are five elements that should be existent in an agreement in order to regard it as a legally binding contract (O’Gorman, 2013). First is the offer, which in this case is the purchase of the blue 4-door Sedan. The second element is acceptance by the buyer agreed to the offer by the seller, which was established in the facts of the case when Jim and Laura made a deposit of $100. The third element is consideration, which was also established in the case when placing a deposit on the car being offered (O’Gorman, 2013).
Mutuality of obligation is the fourth element of a contract where as buyers Jim and Laura are obliged to make a down payment as prerequisite to the purchase of the car. On the other hand, the contract also imposes an obligation on the car dealership represented by Stan to deliver the right product with the right specifications. The fifth element of a legal contract is either competency and capacity or a written instrument. In the case of Jim and Laura, there was no written instrument in the agreement with Stan, but verbally constituted agreement in some cases is also considered as substantial by the Courts (Rasmusen, 2001). In terms of competency and capacity, that aspect of the contract refers to capability of Jim and Laura to consistently make their monthly payments if they decided to push through with the purchase. However, the facts of the case show that some elements of the contract are inexistent such as mutuality and obligation, written instrument, and competency and capacity. Hence, any steps taken by Stan including his claims that Jim and Laura have contracted to buy the car are not legally permissible; therefore, no enforceable contract has been made in the process.
Contract Validity in the Purchase of the Vehicle
Given the fact that Jim and Laura have decided not to continue with their plan, there should be no reason for Stan to insist the couple that they have entered into a contract. First, the agreement made the couple and Stan is only limited within the mutual exchange where the deposit was intended to hold the item in question from being sold to another buyer. The deposit serves as an assurance that Jim and Laura is serious about their intentions to purchase. Having said the term “intention”, it refers to one of the elements of a legal contract, which is consideration. It should be made clear to Stan that the deposit is an exchange of assurance only because Jim and Laura is considering the offer to buy the car, and the purpose of the deposited amount is only limited to the aspect of consideration. The couple considers buying the car, but no to buy it yet. In addition, Stan is the one that violated the nature of his agreement with Jim and Laura because in exchange for $100 as a physical value attributed to the consideration to the offer, Stan is expected to place the car on hold from other buyers within the given timeframe of one day as his part of the obligation to the original agreement.
This means that Jim and Laura is giving Stan a one day window to make a decision, but the possibility of truly buying the car is not yet clear. In addition, Stan agreed to the said hold item arrangement with Jim and Laura and gave an assurance of refund in case the couple decided to cancel. Even without a written instrument that documents the terms of the agreement between the two parties, the fact that Stan stated his guarantee, such statement can be considered by the Court as admissible in the formation of an enforceable contract even if the statement was only made verbally. This argument is based on the context of guarantee as a form of promise, which is also central in establishing the enforceability of a contract. The theory of contract law explicitly regarded the concept of contract as a form of promise (Gulati, 2011). When Stan guaranteed Jim and Laura that the $100 deposit is refundable on the condition that the item in question will be put on hold and the couple will make a decision to purchase within 24 hours, the guarantee becomes a primary component of the agreement that Stan should comply with.
Conclusion
In the case of Jim and Laura, they do not have the obligation to comply with the contract to purchase as Stan insists. This is because the couple had only expressed intention and consideration to the offer, constituted by their gesture in depositing $100 to hold the item, but not to actually buying the car. Stan’s position on the issue that the couple had contracted to buy the car is not admissible on the grounds that there was no formation of legal contract that occurred in the process. There was no element of mutuality of obligation where Jim and Laura agreed to the conditions of the purchase, there was no element of competency and capacity where the couple agrees to pay the car’s monthly amortization, and there was no form of written instrument that binds the agreement between the two parties to consider the purchase contract enforceable. The prior transaction involving the deposit of $100 does not accord with the terms and conditions of the contract to purchase because in the first place the deposit was made under a completely different agreement with a different set of mutual obligation. In fact, it is Stan who actually breached the agreement with Jim and Laura because he supposed to refund the deposit since the couple decided not to accept the offer. Stan’s guarantee to refund and later refusing to abide by the said condition is a breach of the agreement he made with Jim and Laura to hold the item. Therefore, Jim and Laura did not buy a new car as the contract attributed to such transaction was formed without a mutual agreement between them and the car dealership.
References
Gulati, B. (2011). 'Intention to Create Legal Relations': A Contractual Necessity or An Illusory Concept. Beijing Law Review, 02(03), 127-133. http://dx.doi.org/10.4236/blr.2011.23013
O'Gorman, D. (2013). Redefining offer in contract law. Mississippi Law Review, 82(6), 1049-1096. Retrieved from http://mississippilawjournal.org/wp-content/uploads/2013/05/2_OGorman_Final.pdf
Rasmusen, E. (2001). Agency law and contract formation. Cambridge, MA: Harvard Law School. Retrieved from http://www.law.harvard.edu/programs/olin_center/papers/pdf/323.pdf
