A contract is a legally binding agreement between two or more willingparties. It must contain the following five elements competence,offer, acceptance, consideration, and mutuality.
First, the law requires that individuals entering into a contract tobe at least 18 years old in addition to being mentally stable at thetime of making the commitment (Macmillan & Stone, 2012). In thecase study, the condition of competence is fulfilled. For example,both parties are working which means that they are adults and thereis no information that points to the contrary.
An offer involves one or two parties making a commitment to do ordesist from taking part in a particular action (Macmillan &Stone, 2012). The transaction between Stan and the couple involves anoffer as seen in the way the former promised to hold the car for aday as requested by the latter.
The third element is consideration and it refers to an item or act ofvalue traded for an agreed offer. Consideration may take the form ofservice, money, or a promise to execute a certain action (Macmillan &Stone, 2012). The presence of the Sedan fulfills the element ofconsideration.
The other condition that must be present for an agreement to berecognized as a contract is acceptance. A legally binding agreementmust involve the promisee accepting the offer made by the promisorunambiguously (Macmillan & Stone, 2012). The acceptance may takedifferent forms such as words or actions. Jim and Laura can rely onthe element of acceptance to demonstrate that Stan was a fraud. WhenJim and Laura presented $ 100 as a deposit and the amount wasreceived by Stan, the element of acceptance was realized. However,the acceptance was a demonstration of the couple’s expression oftheir interest on the car as opposed to making a commitment tofinalize the transaction.
While the elements of offer, acceptance, acceptance, andconsideration are present in the agreement between Stan and thecouple, the transaction does not meet the requirements of a contractbecause the last condition which is mutuality is missing. Under theelement of mutuality, parties need to demonstrate their consensus tothe terms of the offer. In the case of Stan and the couple, theparties did not agree on the terms of the offer. For example, whileleaving the dealer’s place Jim and Laura knew that the $100 theypresented to Stan was a deposit. Besides, Stan had promised thecouple that the $100 was refundable. Also, Stan and the couple didnot agree on how the rest of the money for the purchase of the Sedanwas to be paid.
The agreement between Stan and the couple is an example of an oralcontract. As such, it cannot be disqualified on the basis thatnothing was put on paper. What is important in any businesstransaction is the presence of the five elements discussed above.Although the $100 offered as a deposit was supposed to prevent Stanfrom selling the car, the couple can argue that the money was toserve as a holding rather than a purchasing deposit. Consumer Affairsand Fair Trading (2015) asserts that as opposed to a purchasingdeposit, a holding down payment does not force a buyer to continuewith the transaction.
In conclusion, for an agreement to be enforced by the court, it mustcontain the elements of offer, consideration, competence, mutuality,and acceptance. From the case study, the elements of offer,consideration, acceptance and consideration existed when Stan offeredto hold the car for a day while the couple provided $100 as adeposit. However, the agreement between Jim and Sam was devoid ofthe element of mutuality. Besides, Jim and Laura can argue that theyoffered $100 to Stan as a holding as opposed to a purchasing deposit.
Consumer Affairs and Fair Trading. (2015). “Buying a new or usedmotor vehicle.”http://www.consumer.tas.gov.au/fair_trading/motor_vehicles
Macmillan, C., & Stone, R. (2012). Elements of the Law ofContract. London: University of London Press.