A contract can be defined as a legal document that performs the tasks of binding two or more parties together. The contract serves as an essential commercial or business transaction tool in the everyday corporate world. Being an essential aspect of the business, contracts are entered in circumstances where there would be trading occurring. For this reason, a contract can be seen as a legal binding agreement between two individuals concerning a given business transaction. Anyone who is over 18 years is legally allowed to enter into a contract. People who are below 18 years old are often seen as minors and therefore are not allowed to enter into a contract unless they have a situation in which the minor is depended on the contract (Overy & Allen, 2015). It is essential to note that a contract does not necessarily have to be written or typed on a piece of paper for them to hold. The only reason why they are typed on paper is to ensure that the parties oblige to everything that was agreed upon.
There are four critical aspects that are critical during the formation of a contract. First, the legal capacity aspect suggests that for the contract to be presumed valid and active or in force, the participating parties must be mentally sound, not under the influence of any substance such as alcohol or drugs that could alter any form of cognitive judgment and must be over 18 years of age. Failing to comply with any of these conditions would make the contract invalid. Second, all parties must be willing to accept and follow all the terms and conditions that have been agreed on by the group. Third, both parties must be considerate of each other’s situations before entering the contract to ensure agreement, and lastly, both parties must have intentions of abiding by the rules of the contract. As an additional pointer due to its relevancy in this assignment, it is essential to note that sometime an agreement could be entered with a family or a friend and therefore these are not necessarily contracts but domestic and social agreements respectively and therefore are non-legal. However, the agreements can be converted into legal treaties by creating contracts in the context of commerce.
1. The Case: Alan, Bernard, Charleen and Damien and Contract Formation
Based on the story making the case, it can be observed that Charleen and Alan are siblings while Bernard and Alan are friends. For this reason, the agreements between these parties are domestic and social agreements respectively. On the other hand, Damien is Bernard’s friend and therefore does not know Alan directly but learns that he was selling his corporate law text book and written notes through Bernard. Based on what was already learned about the law of contract, it is not accurate to assume that the only contract that existed, in this case, was between Alan and Damien. This is mainly because selling the book would entail a process of commerce and therefore making the other agreements contracts entered with the seller valid contracts. It was also noted that Charleen is undertaking her GCE ‘O’ levels in the same year of the transaction and therefore she is probably below the age of 18 putting these factors into consideration. This is because one of the important aspects of entering a contract is ensuring that the parties that are involved are over 18 years of age (MacMillan & Stone, 2012). Consequentially, it is okay to state that Charleen was not in a contract with Damien because of the age factor. A person below the age of 18 can only be allowed to enter into a contract if the situation of the items to be transacted is dire to their life or survival of the underage individual.
Since this was not the case with Charleen, then it can be noted that she did not enter into the contract with her brother Alan or if she did, the contract was not valid as she is a minor. In fact, When Alan agreed to sell the book to her, he was thinking about something else and agreed without realizing her sister her sister was serious about it. Since contracts are legally binding documents, their real purposes are to show two or more parties that have come together to fulfill a given reason. As per general rules surrounding the formation of a valid contract and in regards to the terms of sales, it can be observed that Allan first entered the agreement with Bernard on the 3rd of November 2015, when Bernard posted on Alan’s Facebook stating that after much considerations he had decided to buy the book finally. Therefore, the first valid contract was that between Alan and Bernard. The other valid contracts were between Alan and Damien as the agreements followed all the conditions that must prevail for a contract to be rendered valid.
2. Bernard’s Legal Position and Remedies
Being a friend of Alan on Facebook, presented an opportunity for Bernard to see Alan’s post concerning the sale of the commercial law resources. This post makes Bernard interested in purchasing the book but is a bit short of funds and therefore communicates this to Allan, who is hesitant to sell at this price by the time he sees Bernard’s post because he found a better deal with Bernard’s friend, Damien. After Damien promises to pay the full $200, Alan tells Bernard that the amount he offered was not enough and that he had already found a new customer. Since Bernard wanted these materials, he agrees to pay the initial requested amount, and since he would not be around to collect the materials in time, he decided to post the amount to Alan, who receives the amount. The fact that Bernard had already informed Alan that he would take the book even on Facebook, and he accepted can be seen as a form of contract that was entered between the two parties. Based on the law, the contract is legit as both participants have a sound mind, and not influenced by anything that could affect their judgment and the fact that they are both above 18 years of age. With all these factors considered, it would have been right if Allan decided to sell the resources to Bernard alone according to the agreement.
Originally, no contract was formed between Bernard and Allan because from the Facebook post, Allan had already made it clear that his offer of $150 was merely insufficient and therefore he was not in a position to offer the book to him. However, when Bernard re-evaluated the situation, he later agreed to pay up the entire $200 for the resources, but Allan did not mention the fact that he had entered into another contract with Damien that looked hopeful. Because a contract must be clear, precise and open between the parties involved, the legal position of Bernard in this situation is that he entered into a contract with someone that was not open about the terms of sale of the book (Rego & De Almeida, 2002). Also, Bernard was only handed the textbook without the hand-written notes, with Allan claiming that the notes were scribbled inside the textbook and therefore Bernard might have felt like there was no value for the money he had offered for the resources and therefore could sue for Damages. Also, the moment Alan agreed to sell the book to him, they had entered a contract, but Allan violated the contract by separating the resources and failing to sell the class notes to Bernard but Damien. The remedy for this situation is to raise the alarm for the breach of the contract and demand a refund if the full resources would not be provided as initially agreed (The University of New Mexico, 2015).
3. Charleen’s Legal Position and Remedies
When Charleen tells Allan about his intentions of purchasing the textbook, he does not take her seriously. Considering she is a minor doing her ‘O’ levels, he does not think that she is serious about studying a corporate law textbook and therefore thinks she is joking and thus his mind is distracted when he agrees to sell the book to her. She is, however, serious about the matter and tells her brother that he would pay the full amount by 6th of November as she had said she would. At this point, Allan had already received money for the book from Bernard who had mailed it to him, but he still had the textbook. On the 8th of November, Allan gave the original book to Bernard while he bought another book with Charleen’s funds to end up selling it to Damien. In this case, it is not evident that Charleen is compensated for her money. She had clearly noted that she was interested in the book and therefore according to her, she had the legal obligations to demand the book after paying for it. But her brother does not seem keen on ensuring her sister gets what she paid for. Instead, he ends up using her money to purchase another book that he sells to Damien.
Here, Charleen can raise a complaint about non-compliance as she had already paid for a product that she did not receive (Tufal, 2014). As it was established earlier, she is a minor and therefore the agreement between herself and the brother could not be termed as valid because if her age. However, this does not mean that she should be duped because she is underage or the fact that the contract is not valid. In her situation, the situation is different because even if she did not enter into a contract with her brother Alan, she gave him money but did not obtain anything in return from him and thus this could be the premise of her complaint which would form her legal position. One of the remedies to this concern is that she should ask for her money back or compensation with the textbook which is not probable because Allan had already sold the original copy to Bernard ad used money given to him by Charleen to purchase the same book for Damien. Asking for compensation or suing for damages would be the best remedy for Charleen in this situation.
4. Damien’s Legal Position and Remedies
Of all the people that had bought the book from Allan, Damien was the one that got worth for his money. Even though they found out later that the book was offered for free at school, Damien had received both the book and the class notes from Allan as it was agreed in the contract. Being Bernard’s friend, Damien had heard from Bernard that Allan was selling the textbook together with his notes and was immediately intrigued and wanted the resources to himself. He, therefore, took Allan’s number from Bernard’s form and communicated that he wanted the book and the notes and that he would pay upfront, which Allan agreed and delivered even if the textbook that he did offer was not the original one. According to the contract they entered, Damien has no legal position to reverse this situation as he was the one who willingly entered the contract and got value for his money. Therefore, there should be no complaints even when they found out that the school offered the book for free.
5. Alternative Dispute Resolution Options
Apart from the ordinary legal processes that the participants might want to participate in, there are alternative ways that could be helpful in dispute resolution. For example, the three could utilize arbitration. This is a dispute resolution strategy that entails the resolving of such types of disputes outside the court (Institute of International Commercial Law, 2016). In this case, a third party is introduced in every one of the arrangements entered by Allan and comes up with a decision that is legally binding on either side of the participants and the decision arrived could be enforceable in the courts in case one party is hesitant. It is essential to note that in a case like this, it would be tedious and time wasting to follow a court system to make a decision on what should happen. For this reason, the parties might opt using arbitration as an alternative dispute resolution mechanism.
Institute of International Commercial Law. (2016). Certificate Program on Arbitration. Retrieved May 18, 2017, from http://iicl.law.pace.edu: http://iicl.law.pace.edu/iicl/certificate-program-arbitration
MacMillan, C., & Stone, R. (2012). Elements of the Law of Contract. University of London, 1-58. Retrieved May 18, 2017, from https://www.londoninternational.ac.uk/sites/default/files/programme_resources/laws/ug_subject_guides/elements_law_contract-subjectguide4chapters.pdf
Overy, & Allen. (2015). Basic Principles of the English Contract Law. Advocates for International Development, 1-14. Retrieved May 18, 2017, from http://www.a4id.org/wp-content/uploads/2016/10/A4ID-english-contract-law-at-a-glance.pdf
Rego, L. M., & De Almeida, C. F. (2002). Contract Law. Legal Sources, 1-14. Retrieved May 18, 2017, from http://www.mlgts.pt/xms/files/Publicacoes/Artigos/2013/PLO_-_Margarida_Lima_Rego_-2-.pdf
The University of New Mexico. (2015). Remedies for Breach of Contract. Retrieved May 18, 2017, from http://jec.unm.edu: http://jec.unm.edu/education/online-training/contract-law-tutorial/remedies-for-breach-of-contract
Tufal, A. (2014). Remedies for Breach-Damages. Retrieved May 18, 2017, from Causation: https://www.lawteacher.net/PDF/contract-law/Remedies%20Lecture%201.pdf