Mr. Potbelly is holding a garage sale at his home. Mr. Slim Jim stops by and not

Question

Mr. Potbelly is holding a garage sale at his home. Mr. Slim Jim stops by and notices a rare piece of art pottery is marked $250.00. He knows the pottery is worth a minimum of $2,500.00.

"I'll give you $100.00 for the pottery," Slim Jim tells Potbelly.

"Sure, I'll take it. I need to unload this junk. I'm moving up north. I just lost my job working for an auto parts maker," Potbelly responds.

Potbelly begins digging around for a box to place the pottery in for Slim Jim.

"How much do you want for the house?" Slim Jim inquires.

"I'm thinking $75,000.00." Potbelly responds.

Slim Jim just about collapses. He knows the house is worth double. "Well, I am looking for a place on this street. I'll give you $70,000.00 cash."

"You're kidding? This must be my lucky day. I'll take it!" Potbelly answers.

"I'll be back in an hour with a cashier's check made payable to you, Slim Jim says.

"Great! I have a box in the basement. While you're getting the money for the house, I will find the box for your pottery."

When Slim Jim returns, Potbelly is anything but pleased to see him. Freaky Farah has now stopped by the garage sale. She has clued Potbelly in on the true value of both the pottery and the house. Potbelly tells Slim Jim to "Get Frosted." Slim Jim sues to enforce the sale of the Pottery and the house. Who will win? Why? Fully explain your answer and applying the correct laws. IRAC method can be used such as issue, rules, analysis and conclusion.

Explanation / Answer

Answer:

Contract

Contract is an agreement voluntarily entered by two or more parties so as to create a legal obligation and bind the persons entering in contract. There are two elements of contract, they are offer and acceptance. Contract is entered between two or more legal parties who are capable of entering into contract. Consideration is involved in a contract; no one is ready to do things for others free of cost. Consideration amount is decided with mutual consent of parties. And here both the parties Potbelly and Slim Jim have entered into the mutual consent. Contract may be in writing or it may be oral, it depends on nature of contract and mutual consent of parties. For contract meeting of minds should be there. Here even Potbelly started digging a box to give pottery to Slim Jim. A party could resist a claim of breach by providing that he had not intended to be bound by agreement, only if it appeared subjectively that he had so intended.

Offer: “Offer is willingness to contract on certain terms made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.” The validity of the agreement is determined by court.

Acceptance: The essential requirement for acceptance is that the parties have each from a subjective perspective engaged in conduct manifesting their assent. Acceptance in simpler language means giving assent to the offer. Offer when accepted becomes contract.

Essentials of a valid contract:

Proper Offer and Acceptance: For a valid contract there must be two parties, one making the offer and another accepting it. Offer and acceptance must be valid. To make an offer valid certain conditions like legal relations, terms unambiguous etc. must be fulfilled. Offer must be properly communicated to whom it is made. To make an acceptance valid certain conditions must be fulfilled like it must be absolute, in prescribed manner and unqualified. Acceptance must be properly communicated by authorized person before offer lapse. Both the offer and acceptance are done by both Potbelly and Slim Jim.

Intention to create legal relationship: There must be intention among parties to create a legal relationship. In social or domestic agreements, parties do not intend to create legal relationship but in case of commercial agreements parties intends to create legal relationship. Slim Jim agreed to give cash and Potbelly accepted the offer.

Capacity of Parties: Parties to an agreement must be competent to contract. Parties must be capable of entering into contract. Every person is competent to contract who has attained the age of majority and is of sound mind and is not disqualified from contracting. If parties to agreement are not competent to contract, there will be no valid contract.

Lawful Consideration: Consideration means something in return. An agreement must have a lawful consideration. All consideration is considered as lawful unless and until it is forbidden by law or is fraudulent or involves injury to another person. Here House and pottery are getting exchanged in return of money.

Here in this contract Buyer is at stronger position because contract is valid and both the parties have agreed upon. But one more condition could arise that one party Potbelly is facing loss because of wrong interpretation of property value, either a chance of revision of contract would be recommended so that both parties get benefited out of it.

Free Consent: Consent is said to be free when it is not caused by

There will be no valid contract if the consent of the person is not free.

Lawful object:

For a valid contract the object should be lawful. The object is lawful unless and until it is forbidden by law or is fraudulent or involves injury to another person.

Legal formalities: The agreement must comply with formalities as to writing, registration, stamping etc.

Possibility of Performance: The terms of agreement must be such as are capable of performance. An agreement to do impossible things is in itself void.

Certainty: The terms of agreement must be unambiguous and certain. Uncertain agreement can never convert into contract.

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