Facts: Your office\'s client, Hector Martinez, owns thoroughbred race horses. La
ID: 466108 • Letter: F
Question
Facts: Your office's client, Hector Martinez, owns thoroughbred race horses. Last week, Buzz Bumstead, a stablehand whose primary duty is to clean the horse's stalls at minimum wage pay, was admiring one of Hector's champion horses, Pokey. Pokey had won the Kentucky Derby and was a favorite to win the upcoming Preakness.
After Buzz had asked some questions about the horse's breeding and age, Buzz asked Hector, "How much will you take for Pokey?" Hector smilingly replied, "I'll sell Pokey to you for $500." "All right", replied Buzz, "I'll take Pokey." Buzz simultaneously handed Hector $500 in cash. Hector immediately gave the money back to Buzz saying, "I had no idea that you had so much money. This horse is not for sale. Pokey would bring at least $500,000 at an auction or on the open market. It's impossible for me to let you have Pokey for $500." Although Hector refused to accept the money from Buzz, Buzz insisted that there was a valid contract and that he had bought the horse. Buzz has retained counsel to assist in enforcing the "contract".
Hector has consulted your Bowling Green Kentucky law office to ascertain if there is a valid contract and how he can get out of transferring ownership of Pokey to Buzz.
Your supervising attorney has given you the following project:
* explain what information each of the law books, series of law books, or databases, that you mentioned in response to item 2, above, would provide you;
Explanation / Answer
In this case a kind of verbal agreement was made between Buzz and Hector. Verbal agreements can be legally binding just as written agreements.
To find out if a valid contract exists let us examine the elements of a valid contract.
1. Offer and acceptance - In this case, Hector made an offer to sell his horse Pokey to Buzz for $500 and the offer was immediately accepted by Buzz.
2. All of terms must be agreed upon - The critical term i.e. the purchase price was agreed upon. In this case the decided price was $500. Thus it cannot be said that essential terms have not been agreed on. There are no impending negotiations and impending issues that are left to be discussed.
3. Parties must intend to be legally bound - Under this criteria, the parties must intend to create legal relations. Now in this case the offer made by Hector was in jest and there was no intention on Hector's part to sell Pokey to Buzz. Hector had immediately returned the money to Buzz, clearly indicating his intention of not establishing a legal relation.
4. Consideration - The consideration here is $500 i.e. the cash payment for the horse.
Now, as Hector never intended to enter into a legal relation with Buzz with regards to sale of Pokey it can be established that Hector did not intend to be legally bound and establish legal relations with Buzz.
Thus it can be said that the contract is not valid.
Another important issue here is that the price was $500. Now as per the statute of frauds, any contract for sale of goods totaling $500 or more should be in writing. Thus this oral agreement will not be considered valid as per the statute of frauds as well.
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