A valid business contract refers to a written or spoken agreement concerning sales that is intended to be enforceable by the law. There are some essential elements that characterize a legal business agreement between a buyer or potential buyer and a seller as briefly explained below:
Offer and acceptance
An offer that is given by one party to another party forms the basis of an agreement. Once accepted, the offer becomes an agreement and that is the basis of a contract. In the case between Jim and Laura and the Stan Salesman former makes a verbal agreement for the payment of $100 as the deposit for the car. This is an offer given by one party and accepted by another.
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Mutual consent
Also referred to as ad idem, Mutual consent means “meeting of minds.” In the case under review, the guarantee by the Stan Salesman that the money is refundable serves as a binding agreement is that is mutually accepted by both parties, making it a contract.
Intention to create a legal obligation
In a business contract, the agreement made must subject both parties to a legal obligation and responsibility for failing to honor the contract. Sullivan (2015) states that in any commercial agreement, it is presumed by both parties to go to the court of law if one of the parties fails to honor the agreement.
Free consent of parties
Consent is considered an agreement or a contract only when the parties make an agreement that is free from coercion, undue influence, manipulation, fraud means, misinterpretation of facts, and mutual mistake of facts. According to Sullivan (2015), if any these means are used in a commercial agreement, no legal contract comes into existence. In the case of Jim and Laura and Stan Salesman, there was no legal contract since the Stan Salesman used undue influence to get Jim and Laura accept the agreement. This agreement was not freem on the side of Jim and Laura.
Contracting parties must be competent to enter into a contract
This implies that both parties must have the legal capacity to contract. According to McKendrick (2014), both parties must have qualified to be majors. No party should be a minor. They should also be of sound mind and no party should have been disqualified by the court of law to enter into a contract. In the case under review, Jim, Laura and the Stan Salesman presumably qualify to enter into a legal agreement.
The object of agreement must be lawful
The object of agreement refers to a good or service on which the agreement is based. It must not be unlawful, fraudulent, immoral, unopposed to the public policy or suffers legal flaw in any way. In this scenario, the object of agreement is the blue 4-sedan car. Since the car is a commercial tool, it is a legal object, which makes the contract valid.
Lawful consideration
A valid commercial agreement must be supported by something in return, or else it remains a bare promise. In this case, there was no lawful consideration hence it was not a valid business agreement.
Not expressly declared void
Some agreements have been declared void since they are not in public interest. These agreements include an agreement in restraint of trade, marriage and legal proceedings among others. However, a business agreement between Jim and Laura and the Stan Salesman is not among such agreements.
Possibility of performance
The agreement must be practical in real life situation. The case under review is practical and can be performed as agreed.
Certainty in the meaning of the agreements
If the terms of an agreement are vague, confusing, uncertain or otherwise not applicable, such an agreement cannot be enforceable by the court of law. In this case, there is an element of uncertainty in the meaning of the agreement between Jim and Laura and the Stan Salesman.
Legal formalities
Depending on the nature of the contract, it may be made by a word of mouth or in writing, in compliance with the statutory requirements. For example, an agreement for sell of an immovable object property should be made in writing (McKendrick, 2014). The case between Jim and Laura and the Stan Salesman involves a movable object of agreement. This means that a verbal agreement was applicable, thus the case was enforceable by the court of law.
The case of Jim and Laura and the Stan Salesman falls short of some, but not all of the above requirements. For instance, the agreement involves payment of refundable deposit without a receipt. Neither do they sign any legal document as a binding element. This implies that there is no intention for both parties to create a legal obligation, making the case unenforceable by the court of law. Additionally, there is no evidence of free consent by the parties. There is an element of manipulation and misinterpretation of facts which renders the case unenforceable by the court of law (Sullivan, 2015). Certainty in the meaning of a legal agreement is also lost when the Stan Salesman tries to persuade the buyers to pay $100 without a valid receipt.
From the scenario, it is evident that buyer (Jim and Laura) asked for a written receipt but the Stan salesman guaranteed the refund of the money if in any case it was so required. This is an indication that the seller wanted to avoid a legal obligation to abide by the contract.
Despite the fact that all other elements of a legal contract are evident in the scenario, the three elements (intention to create a legal obligation, free consent of parties and certainty in the meaning of agreements) disqualify the case as being enforceable by the law. According to McKendrick (2014), all these elements are vital and must all be satisfied for the case to be enforceable by the law. Based on the above requirements, there was no legal agreement or contract for the purchase of automobile.
References
McKendrick, E. (2014). Contract law: text, cases, and materials . Oxford University Press (UK).
Sullivan Jr., F. (2015). Banking, Business, and Contract Law. Indiana Law Review , 48 (4), 1195-1222.
