The Specific Rules of Law - Case Study Example

Case Study: Law Number May 6, Faculty CASE STUDY: LAW Q1. Utilising the process of 4 steps, evaluate whether the intention andconsideration elements have been satisfied in the scenario. Step 1: The Legal Issue As a fundamental principle of law, for any valid contract to be entered into between two parties, the elements of intention and consideration in a formal contract must be satisfied (Radan & Gooley, 2010). The element of intention in a contract agreement must have the dimension that confirms the intent of legally binding agreement by the offeror. In response to the offer, the offeree must confirm their willingness and commitment to accepting the terms of the offer by way of a consideration in exchange for the sacrifice made by the offeror. Josh is the offeror while Matt is the offeree. The existence of a legally binding intention is evident in Joshs proposal to sell his car to Matt. The $5000 quoted price for the car for which Josh intends to exchange his car is a consideration in the context of the case in question. Step 2: The Specific Rules of Law For a legally binding contract to prevail, there must be a demonstration of the intention by the parties involved to enter into the contract (Radan & Gooley, 2010). The judgement on whether intention exists should be done objectively from a reasonable person’s viewpoint on whether the intent of the agreement to be binding is observable. The presumption of the law stipulates that in a situation where a commercial relationship exists between the parties to an agreement, there is an intent by the parties to create a legally binding contract. The further provision states that where a purely domestic or social relationship exists between the parties to the agreement, the law presumes that the parties have no intention of creating a legally binding contract. The law of contract stipulates that consideration in an agreement represents an exchange of promises (Radan & Gooley, 2010). Consideration is the price paid by the offeree in exchange for the goods or service promised by the offeror. The provision of a consideration is an essential evidence of a persons wish to enforce a contract. The key element of what can constitute a consideration is that it should be something of value. A consideration must not be adequate, but the law requires that it should be sufficient even when it is of a smaller economic value. In order for a consideration to be valid, it should be executed in response to the promiser’s promise to fulfil their obligations in the context of the current agreement. Step 3: Linking the Rules of Law to the Case The intention on the part of Josh (the offerer) to enter into a legally binding agreement with Matt (the offeree) is arguably owing to the complexity of the relationship between the two parties. Consequently, it can be evaluated that there exists a domestic relationship between Josh and Matt as cousins. However, their relationship does not appear to have influenced the offeror’s quotation of the consideration. The quotation of a consideration lower than the market value of the car is not affected by the domestic relationship between the parties (Radan & Gooley, 2010). The intention with which Joshua proposes to sell the car and Matts willingness to think about it in the very form suggested by Josh is more of a commercial relationship context. In this sense, the parties’ intention can be said to have aimed at the creation of a legally binding relationship. The elements underlying intention of the parties to an agreement is satisfied in the agreement between Josh and Matt. The $5000 proposed selling price for the car forms the consideration in the context of the case. The price creates the legal amount that Matt should pay in exchange for the car according to the original terms of the offer. The change of mind about the price of the car by Josh would amount to a breach of an earlier agreement as Matt expresses his acceptance of the deal before his revocation. Josh submits his intention to revoke the offer belatedly and from a legal perspective, there is a binding contract on the part of Josh to deliver the car to Matt at $5000 consideration. The element of the inadequacy of the consideration for exchanging the car at a price lower than its actual market price is immaterial in the eyes of the law of contract (Radan & Gooley, 2010). The important thing is that the $5000 selling price, though inadequate, is of value. The law considers the valuable aspect of the consideration as opposed to the adequacy. The elements of consideration, as required in the validation of a contract, are met in the context of the case. Step 4: Conclusion Although one may interpret the case as one that falls under the category of domestic relationships between the parties, the reality is that it is more of a commercial agreement. Josh and Matt are both bound by the terms of the contract and any injured party as a result of a breach can seek a legal remedy (Radan & Gooley, 2010). Q2. Using the 4 step process, consider whether the element of the agreement is satisfied in the scenario. Step 1: The Legal Issue The principle of law requires that there must be an agreement between the parties to an agreement for a valid contract to exist (Radan & Gooley, 2010). In the scenario presented in the case, the basis of the existence of a legally binding agreement between Josh and Matt can be judged on the basis of the offer and its acceptance. The aspect of the offerer’s intention to revise the initial terms of the offer does not constitute a dimension that affects the acceptance of Matt to the original offer. In the legal interpretation, a legally binding agreement exists between the seller and the buyer of the car. Step 2: The Specific Rue of Law The law of contract provides that contracts are consensual dealings in which absolute agreement by both parties without any due influence is necessary (Radan & Gooley, 2010). The agreement requires the meeting of the minds of the offeror and the offeree to discuss exclusively what the terms of the contract are. The two main components to consider in evaluating whether an agreement has been met in a contract are ‘Offer and ‘Acceptance. An offer is a statement that signifies the offeror’s willingness to contract. Acceptance, on the other hand, is the assent of the offeree to the terms of the offer. By the requirements of the law, an offer must be promissory and sufficiently complete (Radan & Gooley, 2010). The fundamental aspects of an offer must be clearly outlined for an offer to be said to be sufficiently complete. An offer is meant to be promissory if its wording is done in a way that clearly shows the offerors willingness to honour its terms in case it is accepted by the offeree. It should be more than a mere expression of the offeror’s willingness to do business. An acceptance must conform to the terms of the offer and cannot impose any conditions. More importantly, an acceptance can only be made by the person to whom the offer is proposed and be communicated to the offeror. Once an acceptance is communicated, the agreement becomes binding and cannot be undone. Step 3: Linking the Rule of Law Josh, who is a mature person, makes an offer to sell his second-hand car to Matt. Assuming that Matt immediately accepted the offer, there would have a binding agreement between the two parties at the time. Josh had made up his mind when making the offer signalling his willingness to honour it if in case Matt out rightly accepted it. By nature, it is a promissory offer and not a mere expression by Josh of his willingness to do business. The intention is to dispose of the old car in order to buy a new one and not to make a profit out of it. The offer made by Josh targets selling a BMW second-hand car at $5000. The ability to identify the item being sold, its price and the person to whom it was being sold makes the offer sufficiently complete (Radan & Gooley, 2010). Acceptance of an offer must not be made immediately after the offer is made. There is a provision of time within which the making of an acceptance of declination to the offer by Matt would have lapsed. Both Josh and Matt were in an agreement that Matt was to sleep over the matter and make his response via phone the following morning. Josh had the opportunity to revoke the offer before Matt accepted it. However, Matt communicates his acceptance to Josh before he could revoke the offer. It is arguable whether the fact that Josh and not Matt had called would have an impact in judging the validity of the acceptance. Of importance is the fact that Matt accepts the offer at exactly the time he was supposed to confirm it (Radan & Gooley, 2010). Therefore, there is evidently the constitution of a valid offer and a valid acceptance in the case amounting to a binding agreement between Josh and Matt. The elements of the agreement are satisfied in the case. Step 4: Conclusion The argument of Josh about changing his mind, the discovery of the actual market value of the car and his relationship with Matt come at a time when they cannot stand the ground in law. According to the case, these remain as thoughts in the mind that are overtaken by Matt’s acceptance of the offer that legalises their contractual relationship. Josh is obliged to surrender the car to Matt at the stated $5000 selling price. In case Josh breaches the contract, Matt can sue for damages (Radan & Gooley, 2010). References Radan, P., & Gooley, J. (2010). Principles of Australian contract law. Chatswood, N.S.W.: LexisNexis Butterworths. Read More