Stim (2011), states that over the years forming of a partnership as well as other business relationships has always introduced the premise of contractthis making it a well discussed issue in business law; however, not much is known about a ‘valid contract’. According to Himawan and Kusumaatmadja (1973), a contract is defined as a written or expressive agreement between two or more parties in reference to conducting a fruitful transaction. However, this definition is subjective considering that the term ‘agreement’ may not mean validation. For a contract to be valid there are a number of issues that have to be considered; this paper will provide an in-depth comprehension of a contract ore particularly a tenancy contract (landlord-tenant) by using a case example of Sam; his landlord and the electronic chains store.
San Román et al. (2011), states that despite the numerous definitions presented to state what a contract is one fact that should be presented is that all agreements are not contracts are not contracts; however, only agreements enforceable by the law are what can be termed as contracts. As earlier stated,Himawan and Kusumaatmadja (1973) state that a contract is a written or oral settlement between two or more parties in a business. In reference to San Román et al. (2011),explanation, this premise is subjective and flawed, as it does not hold enough content in a way that would be used in law. For a contract to be veiled it has to have the following factors;
- Offer and Acceptance. According to Burnham and Kraynak (2012), in the law of contract, an offer is regarded as the preposition that is given to a party holding details of an agreement. For it to be recognized by law the contract should have full disclosure of all the details that are regarded as essential and reduce any case of lack of knowledge form a party. After the details of the offer have been discussed, the offer has to be accepted without duress for it to be realized as a valid documentation of an agreement. In any case, if one party in the argument states a case where they were forced into a contract by any form of coercion the contract is invalidated. Once the contract has gone through these two processes, the two parties are not allowed to back out of the business deal unless there has been a breach in terms. In the case of Sam and the chain store, it is more of an agreement than a contract since there are several issues that remain vague to the point of the chain store not enforcing any legal action. The first instance is that the chain store never provided Sam with the time limit of delivering the 1000 units that he had verbally agreed upon. In addition to this, the store in order to ‘exclusively’ sell Sam’s device required more than a verbal agreement since it would require Sam to acquire a patent for his invention that would be part of the chain stores contract. These two factors allow Sam not to be held legally accountable by the law.
- Intention to Create Legal Relationship. According to Gillies (2004), an agreement is not a contract until there is an intention for the involved parties to create a legal relationship within their settlement. Tulsian (2000), states the statement “terms and conditions” is what makes a contract legally bound suggesting that any breach of these terms and conditions is what the law uses in the court. Marson and Ferris (2015), states that in case there is no intention on the part of any of the parties involved in accepting any term or condition then the contract is termed invalid; in reference to this the author states that an agreement of social or domestic nature are not fully accepted as legal. Sam in this case never received any terms and conditions though the store wanted to have ‘exclusive sales’ of the invention this meaning that Sam would not be allowed to sell this product to any other party which is a sensitive issue considering that the chain store would be the biggest determinant of his profits. In addition, there is no official acceptance from Sam agreeing with the ‘exclusivity’ nature of the agreement.
- Lawful Consideration. As stated above that for any agreement to be considered a legally binding it has to be offered, negotiated upon and finally accepted; however, it has to follow the legal recommendations as stipulated by the law. In case the contract has a payment structure of any breach of terms or conditions, the payment scheme has to be the legal limits. According to Gillies (2004), the law works in reference to legislative limits, this consequently would suggest all parties entering into a legal agreement should consider this limits. In reference to Sam’s case, the limits within him not delivering over his inventions are not stipulated and he is not in any way informed of any penalties hence no legal consideration.
- Legal Formalities. Marson and Ferris (2015), states that an oral contract is a valid contract except those that require written proof such as registration. Leases, sales as well as registration are some of the agreements that require written documentation and these cases all require written documentation to be considered valid. In the case of Sam, the sale of his invention is complex since it includes an exclusivity clause; this consequently would suggest the need of a written agreement that is recognized by the law.
As stated by San Román et al. (2011), the legal premise that defines a contract and distinguishes it from an agreement should have the above factors ; however, the chain store may have grounds for a taking legal action if they prove the agreement they had was a quasi-contract. According to Himawan and Kusumaatmadja, (1973), under law of contract a normal contract the parties involved are required to be under the same terms without any duress. On the other hand, the provision changes when it comes to a quasi-contract, which is described as a legally binding agreement that involves parties who had not originally intended to, get into a contract. A quasi-contract is developed to ensure that the parties getting into an unplanned agreement do not take advantage of each other as it offers a level playing field for all parties involved (Gillies, 2004). However in the case of Sam and the chain store there are issues that may warrant the oral contract meet as a quasi-contract first considering that Sam was the individual who presented the proposal to the store manager. The store exclusivity in the sale of the invention was attached to a considerable financial benefit this forming one of the precedence that form a quasi-contract. The plaintiff has reason to sue since the store was placed in a position that allowed them create a benefit for the sale of the products hence the commitment to buying 1000 units. However, in reference to a promissory estoppel the chain store may not have grounds for recovery since no sign of damage was presented to Sam in consideration to the promise he offered the store. A promissory estoppel works when an individual breaches a quasi-contract and in the process,the plaintiff incurs considerable damage. This factor is not presented to Sam this meaning a legal action would not be considered by the court.
Other than the later from the chain store Sam was also given a 30 days eviction notice by his landlord Quinn who stated that Sam’s new barking device was proving to be a deterrent to peaceful tenancy to his neighbors.The later also states that his tenancy contract forbids him from conducting any business from his premises; a fact that was breached when he decided to provide the chain store with 1000 units of his device. Sam states that he had infirmed Quinn of his new invention and his intentions to sell it and in return, the landlord wished him luck after the fact. According to the landlord tenant Act the landlord is obligated to provide tenants with a quiet and peaceful environment; this being noted, it was the obligation of Quinn to notify Sam of his device as it affected the other house occupants. By using this example, it is clear that Sam had breached a term in the tenancy contract.Other than noise, Sam’s eviction stated that he was not allowed to conduct any business from his premises yet he did. In reference to this statement the landlord may have overreached as Sam though in agreement with the chain store to provide 1000 units of his device had not conducted any exchange of goods for payment from the premise and consequently there was no evidence of him using resources from his house for personal business.
Quinn as the proprietor has grounds of evicting Sam from is house for causing notice that affects the rights of other neighbors. However, the date of eviction would go beyond 30 days incase Sam had already paid the monthly rent this suggesting that the tenant would have 60days to leave the premises. On grounds of conducting business from his home, Quinn has no grounds since no business was done between Sam and the security store. Sam on the other hand would use the fact that Quinn as a property owner, does not provide proper security since his device only activates when there is a detection of an intruder and he placing his device in the house though noise was for the protection of his assets in the house.
In summary the issues regarding the formation of a contract though not new in business law remain complex.in this paper an in-depth explanation of what a contact is has been placed with the four features that make a contract different from an agreement have been discussed. This is in reference to Sam, the chain store as well as his property owner. The final verdict is that Sam may not be punished legally for both letters he received.