Instructions: Read the facts of the following (an actual, real life) case. Based on your knowledge of contracts from Chapter 6 take a position (either ‘yes’ it is a valid contract or ‘no’ it is not a contract). Indicate your position by commenting to this post, again either "yes a valid contract" or "no not a valid contract" and briefly explain your reasoning. Please, no hedging (yes or no only).
Question: Is this a valid contract?
Case: Jack and Joan Brown made it a habit to stop by the Dew Drop Inn every Friday night after work. Here they would meet their best friends, Sam and Shelly Simon, for an evening of dining, dancing, and libations. One Friday, Jack and Joan came stomping into the Dew Drop, having just received their tax assessment for a piece of bare ground they owned adjacent to their home. “I can’t believe this tax assessment,” moaned Jack. “The county is going to raise our property taxes $400 on that vacant lot because they say it’s worth $20,000! Boy, if we could get that kind of money for it, we’d sell it in a minute.”
Several beers later, Sam questioned, “Are you really serious about selling that lot, Jack? We’ve been wanting to build a new house, and being right next door to our best friends, well, I think we’d be interested in buying it.”
“Like I said,” remarked Jack, “if it’s worth $20,000, someone can have it!”
With that, Sam reached across the bar, grabbed several napkins, and scribbled out a makeshift agreement, containing the full names of the parties, the purchase price, and the legal description of the property, taken from Jack’s property assessment notice. Sam and Shelly both signed the napkin/contract, as did Jack and Joan. They toasted the occasion as Sam handed his check for $20,000 to Jack.
The next morning, Jack called Sam. “Hey, buddy, what shall I do with this check you gave me last night? Should I rip it up?”
Sam replied, “Of course not. We want the property. A deal’s a deal!”
A month later, Sam and Shelly were served with papers announcing that the Browns were suing them for coercing the sale of the property. Obviously, Jack and Joan didn’t believe that a sale had been made.
Thursday, February 28, 2008
Is this a valid contract?
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6 comments:
Yes it is a contract - maybe not a good one...
It is a written agreement which describes the terms, and which all parties signed at a neutral location. To seal the deal, Jack accepted the check.
Some valid points Tim but what about the issue of "Capacity?"
Well maybe my post will show up THIS time...
While the book didn't include self inflicted diminished capacity (too much beer), I suppose Jack could claim it in his effort to void the contract. With my current, limited understanding of real estate contract law, I would have a difficult time siding with Jack if I were on the Jury for his lawsuit.
While the book didn't include self inflicted diminished capacity (too much beer), I suppose Jack could claim it in his effort to void the contract. With my current, limited understanding of real estate contract law, I would have a difficult time siding with Jack if I were on the Jury for his lawsuit.
It's in writing. Contractual capacity deals with under age 18 and mental ability. He took the check, signed the paper- sounds like it's done to me.
Again, this scenario was based on an actual case. A judge found in favor of the defendant (i.e., it is a valid contract). However, this was actually a fairly close case, and it might have gone the other way in another courtroom. The contract was in writing (which is required for sales agreement according to the Statue of Frauds) and the type of paper or type of print does not matter (it could be handwritten on toilet paper). Also, the offer had a legal description of the property taken from the tax assessment notice. The plaintiffs did had a basis for arguing over capacity and consent.
The argument over capacity centered around the alcohol issue and duress. With all the drinking going on, the plaintiffs claimed that they did not have 'capacity' to enter into a contract. This did not fly with the judge, as these were pretty functional drunks and sober enough to put together a valid contract. Bottom line here is that you can't have a couple of beers and try to get out of contract you enter. (Just think about all the business contracts that are negotiated over the two or three martini lunch.)
The consent arguement probably held the most water. The plaintiffs argued that they were under mental duress and not of sound mind after receiving their tax bill. They were upset at the time and not serious about selling the property. This judge did not buy this argument either and ruled that there was a valid "offer and acceptance" (mutual agreement or meeting of the minds).
What happened to our two couples. They definately did not return to the Dew Drop Inn together. The plaintiffs had to purchase the property but turned around and resold it shortly thereafter.
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