Jim and Laura Buyer visit the local car dealership because they are interested in buying a new car. The car they currently have is aging and is starting to have mechanical problems. Jim and Laura would share the new car, and use it to go back and forth to work and school. Before going to the dealership, Jim and Laura decide that they can only afford $400.00 a month in car payments.
Once at the car dealership, Jim and Laura meet Stan Salesman. Stan shows them several vehicles and Jim and Laura test-drive several of the cars. Jim and Laura particularly like the blue 4-door sedan. Therefore, they agree to give Stan Salesman a $100.00 deposit to hold the car for a day. Stan Salesman does not give them the receipt but guarantees that the $100.00 is refundable. No documents were signed.
The next day, Stan Salesman calls Jim and Laura to ask them when they would like to take delivery of the car. Jim and Laura, on the way home from the dealership, decided that they were not going to buy the car because they did not want to spend that money each month. Therefore, Jim and Laura tell Stan salesman that they have decided not to buy the car and request their $100.00 deposit back.
Stan insists that the $100.00 was a deposit on the car and was meant to be part of the contract to buy the car. Stan is very persistent and insistent that Jim and Laura have contracted to buy the car; therefore, the $100.00 will be applied to the purchase price of the car. Jim and Laura are shocked and angry as not only do they not want to spend the money, but now feel as though they are being duped by Stan Salesman.
Jim and Laura have an appointment to see a lawyer in a few days, but know you are a student taking a business law class and come to you for advice. They are very frazzled, and understandably upset that they may have just purchased a car. Since you have been taking business law, you have read and understand the elements of a contract and the defenses to a contract. Therefore, although you are not a lawyer, you provide some basic advice from what you’ve learned in your business law class.
In three to five (3-5) pages, advise Jim and Laura based on the above facts as presented, the material provided in the text, and material covered in the lecture. In your paper, be sure to address the following:
Define the elements of a legal contract using examples from the scenario where applicable.
Decide whether or not there was a contract for the purchase of the automobile.
Identify the facts from the scenario which support your decision on whether or not a contract exists for the purchase of the automobile.
Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as quality academic resources.
Format your assignment according to the following formatting requirements:
Typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page is not included in the required page length.
Include a reference page. Citations and references must follow APA format. The reference page is not included in the required page length.
A contract is a form of an arrangement which is meant to tie two or more people together in performing a certain business transaction. A contract is provided by in the laws of the country and can be used as a legal tool in the presentation of evidence or a legal suit. Contracts take two main forms, for instance, some contracts are written while others are by word of mouth. However, for most contracts, it is ethically required for them to be put down. For written agreements, they are signed and form strong evidence in case of disagreements. Oral contracts at times are hard to be accepted as evidence in the case of a disagreement since there is no evidence supporting them and they can be subject to massive fraud (Wilmot, 2009).
Applying the Law of Contracts on Laura and Jims Case
Laura and Jim had the intention of buying a car. They approached Stan a sales agent who presented them with a deal where they were to pay installments. However, they choose to have the car for a day and decide whether to purchase it. In order for the request to be granted, they paid a deposit of $100.00. This money had a refunding measure on it but it was not clear at all. They decided not to buy the car and seek their deposit back, their deposit was not granted since it was part of the deposit.
Analyzing this scenario, a contract existed between Laura and Jim and Stan the sales person from the car dealership. Why conclude that an agreement existed, this is because the main requirements of an agreement were present. Having a look at these main characteristics of an agreement below:
It was binding in the sense that Stan and Laura had a certain arrangement with the sales executive. They were to pay the deposit, use the car for one day and decide whether to purchase it. On the part of the sales executive, a deposit of 100.00 was to be paid which would be part of the sale agreement if they decided to buy the car. However, they decided not to buy the car and wanted a refund which Stan had talked about. Laura and Jim plus Stan all agreed to the ratification as per the contract. Immediately this made the contract to be a mutual agreement which bound the parties together (Ewan, 2005).
Offer and Accepting
It is true that there was an offer tabled before the clients who are Laura and Jim by Stan. The offer Stan made to them is buying the car and pay through installments on $400.00 in a month. It was not made clear for how many months they would be paying for the car. Also as part of the offer made to them, they would pay $100.00 and use the car for one day. This deposit would be part of the installment if they decided to purchase the car. On their part, Jim and Laura accepted the offer since they paid the $100.00 in order to use the car for one day. This shows that a contract was in place.
No Party Was Forced to Enter into the Contract
There is no evidence in the case to show that one of the parties was forced to agree to the terms of the contract. Further, all the parties were sane enough to take part in the negotiations hence making the contract valid. Also from the negotiations, we get to have a mutual agreement between the parties which is oral.
Was there a Contract to Buy the Car or Not?
It is evident that there was a contract between the parties on the terms of payments. However, no contract existed for the purchase of the car. What Laura and Jim did is that they made their intentions clear that they would like to purchase the said car but they never entered into any contract with Stan. Further, Laura and Jim are exemplified by the contract since there was no receipt issued to show their payment. This would work against Stan in the case of a legal battle since in such transactions it is a requirement that some documents have to be signed. However, this never happened.
Secondly, when it comes to the purchase of the car, one essential element of contracts of purchase is missing. It is called consideration. In the above case, the consideration is what if Laura and Jim decide not to buy the car who would cover the maintenance expenses of using the car for the one day. This is not specified anywhere even in their oral agreements hence this makes the contract on purchase null and void.
Final Assessments of the Case
From the information reviewed quite a lot meets the eye which was never satisfied. How come Jim and Laura decided to make payments to a car dealership and request no receipt to show that they paid $100.00. Also, they never took their time to enquire from Stan since the money was refundable under which circumstances would it be refunded. If they choose not to purchase the car, would this be one of the scenarios where a refund is applicable or not? This makes their request for a refund quite difficult. Stan can go ahead and deny that no money was given to him since no documentation was made (Douglas, 2002). My opinion is that a certain amount should be refunded to Laura and Jim and not the whole amount since they used the car for one day.This question has been answered
Douglas, D. (2002). Contract and Civil Rights. Michigan Law Review.