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- QUESTION
Ford Mustang
Sally and Tim have been friends for a long time. Sally has had a 1967 Ford Mustang for about 10 years, she inherited it from her father after he passed away. Tim has told Sally many times that the car is now worth a significant amount of money and she should look in to selling it, but she always tells him that she will never sell the car. One day, after hiking Tim and Sally were starving and stopped at the closest restaurant. When they got inside Sally realized her wallet must have fallen out of her bag while they were hiking. In her head, she is laughing at her bad luck and she turns to Tim and says “if someone gave me a handful of cash right now I would give them my mustang”. Tim, turns to her and asks “so you would give me your mustang for 50 dollars” Sally, chuckling turns and says “Yes I am so hungry, if you give me 50 dollars I will give you my mustang”. Tim gives Sally 50 dollars and the next day shows up at her house for the car. Sally can’t believe it, she didn’t mean to sell him her mustang for 50 dollars and tells him to leave.
Part 1: Did Sally make an offer to Tim to sell him her mustang?
Part 2: If we assume that Sally’s statements were an offer, were the terms definitive enough for a contract to be formed?
| Subject | Business | Pages | 3 | Style | APA |
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Answer
Ford Mustang Case Study
Part 1: Whether Sally Made an Offer to Tim To Sell Him Her Mustang
Issue
The issue for determination is whether Sally’s statement that she was hungry and if anyone gave her a handful of cash, she would sell her mustang constituted a valid offer.
Rule
For an offer to be valid, it has to be expressed on certain/definitive terms and binding as soon as it is been accepted by the party to whom it is addressed. One of the tests that the court applies to test the existence or otherwise of an offer is the reasonable person test. Specifically, the court has to determine how a reasonable person would view the situation in question. In Smith v. Hughes [1871], the Court held that a determination of whether there has been a valid offer is based on the subjective intentions of the offeror based on the views of a reasonable person. The other test used is whether the offer was made in jest. In Keller v. Holderman [1863], the Court held that an offer made by one of the parties in jest and accepted by the other party; who understands that it was made in jest, does not result in a binding contract. Moreover, courts have differentiated between offers and invitation to treat. An invitation to treat is a mere statement of intent and request for information as was held in Partridge v Crittenden [1968].
Application
Applying the rules above, Sally merely stated; laughingly, that she would sell her Ford Mustang because she needed some cash to quench her hunger. As such, her intentions were not to sell her car. She merely made the statement in jest; while laughing at her bad luck, and Tim knew that the offer was made in jest.
Conclusion
Sally did not make an offer to sell Tim her Ford Mustang because her statement was made in jest and should not be termed as constituting a valid offer.
Part 2: Whether the Terms Definitive Enough for A Contract to Be Formed
Issue
The issue to be determined in this case is; assuming that Sally’ statements were an offer, whether the terms stated definitive enough for the formation of a valid contract?
Rule
The terms of a contract should be definitive enough for a contract to be formed. There should be a meeting of minds where the parties intend to enter into a legally binding agreement. The definiteness must be such that it is easy to identify the parties, the subject matter of the contract, consideration to be paid, time of payment and performance. However, the absence of definitive terms does not void a contract as was the position in Raffles v. Wichelhaus [1864].
Application
Applying the rule in the present case, assuming that Sally made an offer, Tim was to pay a consideration of 50 dollars and those terms are not definitive enough to ensure the formation of an enforceable contract. For instance, the statement “your mustang’ is not definitive enough. The car should have been described in definitive terms to ensure that it cannot be confused with any other car.
Conclusion
Assuming that sally’s statements were an offer, the terms are not definitive enough for the formation of a valid contract. However, it does not mean that a contract will be void because of the lack of certainty in some of the terms.
References
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Keller v. Holderman [1863] 11 Mich. 248. Partridge v Crittenden [1968] 2 All ER 421. Raffles v. Wichelhaus [1864] EWHC Exch J19. Smith v. Hughes [1871] LR 6 QB 597.
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