Mr. Maust, who had a long-term relationship with the Pennsylvania-Lake Erie Rail

Question

Mr. Maust, who had a long-term relationship with the Pennsylvania-Lake Erie Railroad Company for the supply of diesel fuel, suggested that a formal contract be agreed upon by the parties to cover future supplies of fuel. The railroad sent Mr. Maust a draft contract for review. Mr. Maust added some changes and sent it back to the railroad and wrote “approved” at the end of the draft. For some time, both parties then acted consistently with the terms that had been developed by the parties. Unfortunately, there was a disagreement, and when diesel prices rose (causing Mr. Maust to lose money on the deal) Mr. Maust argued that there was no formal agreement in place between them. Determine whether a contract was formed between the parties.

Explanation / Answer

For any contract to happen there are few essential things which needs to be maintained. In this case, before any formal contract they were working with faith and trust in their long-term relationship. After both the parties agreeing upon to create a formal contract, when there was consideration regarding the terms and conditions and Mr. Maust even agreed with all the terms along with including few changes, which shows that they agreed formally. If Mr. Maust has signed and then written approved in the appropriate document, then it is a contract. Here, a initial offer, acceptance, consideration, consent of both the parties, both the parties being competent enough and if it is in written then it is a contract. If in writing, then it is a contract and it can be enforceable by the law. When fuel prices increased and if nothing is written on increase or decrease in fuel prices, then one cannot claim but if it written, then you have to abide by the contract else it will be a breach of contract.

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