Business Law - Report Example

Munaf Usmani Academia Research Dec 05, Alison Vs Express Coffee Pvt Ltd. Business Law Question In the eyes of law, a contract is a legally binding agreement between two or more parties. Since a contract is legally binding, it involves the various clauses which must be met in order to hold it valid according to the law. In order to be able to engage in contractual obligations, an individual must be competent enough. These include that one must be of sane mind, over and above the age of 18 years, and be not under the influence of external agents such as drugs or alcohol. To be legally binding, a contract requires two vital components which are agreement and consideration. Consideration is usually the trade of something, such as remuneration for employment with a service contract. Intention is where both parties make a contract with the intention of that contract to be legally binding. Consideration of a contract includes many terms of agreement which include the following: Conditions of the Contract: What are the specified agreements which will fulfill the contract. Performance: how appropriately each party involved in the agreement performs as per conditions. Payment Terms: It will specify date of payments, and the amounts. Liabilities: It involves the disclosure of each party’s liability in the contract. Breach of contract: What will happen in case either party defaults. Although it is usually the wisest option, legally binding contracts do not just apply to contracts set out in writing. Under the eyes of the law verbal contracts are just as legally binding as written contracts. In the case of Alison vs. Express Coffee Pvt Ltd, there was a valid contract in set in place, and hence the contractual terms would stipulate that she should be given the coffee machine. Let’s consider the case. Initially when the advertisement was posted on the website, it implied that the company wanted to the product. In legal terms, an advertisement is only a promotion or offer of a product or service made to the public. Hence up till now there was no contractual obligation on the part of Express Coffee. Once Alison viewed the advertisement on the website, she was interested in the offer and accordingly she responded to the advertisement in writing that she was willing to accept the offer. On receiving this reply, the authorized representative of Express Coffee responded that the price of the product had gone up, and they would hold the product for the customer till a given time and date given she provide delivery of payment within the stipulated time frame. Alison’s response to that was she accepts the offer, and asked for a couple of days to initiate and affect the payment. Now this is where we realize that a contract has been affected. Firstly, both the parties have shown willing agreement for entering into the sale. Secondly, a price was determined and agreed upon by both parties. Thirdly, a specified time frame was established for the delivery of the payment. This covers the aspect of consideration for a legally binding contract. Up until now, it is clear that both parties have entered into a concrete agreement that a sale of a specific item will be exchanged with a delivery of payment of a specified amount on an agreed time and date. However, one day prior to the expiration of the agreement terms, Express Coffee intimates to Alison that they have already sold off the coffee machine to another client, and that the offer is no longer valid. Here we have a case of breaching a contract. The question that now arises is whether Alison can claim the coffee machine through court. As specified at the start of this document, there are a number of factors involved in establishing the validity of an agreement in the view of the law. In this case, Alison and Express Coffee did indeed enter into a contract. We must keep in mind that written agreements can be substantiated if taken to arbitration. Alison has a compelling argument that since she was given proper terms of agreement, the offer should remain valid for her and since she had affected the payment before the expiration of the contract, she should be given the coffee machine. Furthermore, the company had committed in writing to the customer that they would hold the product for her till then, which they clearly did not do. This violates the terms of the contract. However, in Express Coffee’s defense, they can claim that the advertisements made for the public are not binding offers, but rather just a public disclosure of intent to sale. Since the contract did not specify any terms in the case of either party backing out of its commitment, it gives Express Coffee the leeway to avoid any punitive damages etc. Since the contract does not stipulate any infringement clauses, the case would be left to the judgment of a third party arbitrator. The answer to the question is that yes, Alison and Express Coffee did enter into a legally binding contract. However there were some elements missing in the contract which could allow for Express Machine to back out without having to pay anything. Question 2 In the case that Alison is a recipient of the coffee machine and it does not work according to her desires, there will be no violation of any statutory implied terms. We must go back to the key considerations while entering into a contract. One of them was the liabilities involved with each party when entering into the deal. The two parties had not specified anything with regards to this. Furthermore, when Alison was viewing the advertisement initially, she had found the coffee machine to be ideal for her café. It was her judgment and choice to purchase the item. If the machine cannot handle the workload in peak hours, it is not the responsibility of the client. The customer has to inquire about such specifications as the client does not know the usage of the customer. In the event of this happening, Express Coffee will not be liable for anything on legal grounds. There is a clause in the Uniform Commercial Code, the sales regulations of the USA, which states that “Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the sellers skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.” (Clause 2-315). In the section referenced, it states in Clause2-316-3b and Clause2-316-3c that “if the buyer before entering into the contract has examined the goods or the sample or model as fully as desired or has refused to examine the goods after a demand by the seller there is no implied warranty with regard to defects that an examination in the circumstances should have revealed to the buyer;  and an implied warranty may also be excluded or modified by course of dealing or course of performance or usage of trade.” However, if they have issued a refund clause, then in that eventuality Alison can get her money back. Apart from that, there is no breach of statutory implied terms on the part of Express Coffee and it can primarily be accosted to the miscalculation of Alison regarding the capacity handling of the machine and her own workload. Works Cited Uniform Commercial Code, www.law.cornell.edu, 1952 (Revised in 2003), Web, December 4 2010. Legally Binding Contracts, www.contractsandagreemtns.co.uk, Not Dated, Web, December 4 2010. Read More