Business Law Paper on Contracts
A contract is a legal binding agreement between two people. For a contract to be legal an offer must be made and the other person must accept the offer made. A price must also be paid to show willingness of an individual to enter into the contract. For a contract to be binding, both parties must enter the agreement without being forced into it.
Willingness to enter an agreement
Jim and Laura went to a car dealership since they were interested in buying a new car. Stan had a car that matched their needs, that is, a blue sedan which they could buy and pay monthly instalments of $400. This shows that both Jim and Laura were willing to join in a contract with Stan salesman (Hong & Brisbane, 2015). However, just having the willingness to buy the blue sedan doesn’t mean that they have already entered a contract.
Offer and acceptance
After Jim and Laura carry our test drive on several cars and settle on the blue sedan, Stan makes them an offer, which involves giving him a deposit of $100 and taking the car home for a day. Stan does not give them any receipt for the deposit made. However, he gives them assurance that the $100 deposit is refundable. Even though Jim and Laura are given no papers to sign, they agree to pay the deposit and take the car home for the day.
A contract is deemed legal when it is done in good faith and both parties accept the contract. Some people think that a contract is not binding if it is done orally. However, as long as both parties agree to the agreement made orally, then the contract becomes legally binding (Hirby, n.d). Therefore since both Jim and Laura agreed to the oral agreement made to them by Stan salesman to them, the contract is legal and binding.
When Jim and Laura take the car home, they decide they will not accept Stan Salesman’s offer since they do not want to be spending $400 each month on a car. When one party makes an offer; the other party has a right to reject or accept the offer (Hong & Brisbane, 2015). The agreement becomes legal only after an offer made becomes accepted by the other party.
Jim and Laura agreed to pay a deposit of $100 and take the car home for a day after Stan assured them that the deposit was refundable. They made the contract in good faith, knowing their money would be returned if they decided not to buy the car. However, after telling Stan about their decision to reject his offer, Stan insists that they already made a contract and therefore they must buy the car and that the $100 will not be refunded as it is a part of the contract to buy the car.
Jim and Laura agreed to pay $100 to hold the car for the day. They did not pay the money to show that they have agreed to buy the car, though it implies that their intention was to buy the car. Though the contract is legal since they first agreed to Stan’s offer and paid a deposit on the same, the contract can be terminated since they decided not to buy it and communicated their decision to Stan. After deciding not to buy the car, Jim and Laura communicate to Stan about their decision. Therefore, since they have communicated to him about not accepting the car, their decision to reject the offer is deemed legal by the law (Hong & Brisbane, 2015).
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Masson, S. (2016, August 25). Is my deposit refundable? #AskTCE | The Car Expert. Retrieved from http://www.thecarexpert.co.uk/is-my-deposit-refundable-asktce/
Hong, C., & Brisbane, P. (2015, July 29). What are the elements of a contract? – Hillhouse. Retrieved from http://www.hillhouse.com.au/legal-question/what-are-the-elements-of-a-contract/
Hirby, J. (n.d.). Is A Verbal Agreement Legally Binding? Retrieved from http://thelawdictionary.org/article/is-a-verbal-agreement-legally-binding/