Sale of Goods Contract

Saleof Goods Contract

Saleof Goods Contract

“Acontract is an agreement between two or more persons that is legallyenforceable in the court of law,”(Harris, 2015).It can be formed from implied actions of people making the agreement,orally or put down. For any agreement to be legal, it must have theseelements two or more parties, an offer, an acceptance, there must bea consideration, parties must have the capacity to contract, theremust be mutuality of obligation, parties must have intentions tocreate legal relations, the subject matter of the contract should belegal and for some to be binding, they must be written (Harris,2015).Thus, in the case between Stan, Jim and Laura, there was formation ofa contract as some essential elements, which make the agreement validwere fulfilled.

Elementsof a Valid Contract

Tobegin with, a valid contract must have parties for example, in thesale of goods, there must be a buyer and a seller. These parties mustbe willing to enter into an agreement (Beatty,&nbspSamuelson,&nbsp&ampAbril,&nbsp2015). In the facts given in the case study, there aretwo buyers, who are Jim and Laura, who approach Stan, the seller withthe intention to enter into a legally binding contract to purchase acar. This can be supported by the fact that Jim and Laura afterreaching in the dealer’s shops test various cars and settle for theblue four-door sedan car, which they request the dealer to keep itfor them.

Jimand Laura committed their actions by giving Stan a deposit of $100.From their actions, one can claim that they made an offer to buy thefour-door sedan when they made up their minds to settle for that carand committed their actions. On the other hand, acceptance was madewhen Stan took the money from Jim and Laura for the car to bepurchased. The money was the consideration (price of the promise) forthe car on the part of Stan, while on Jim and Laura it was the car.

Moreover,from the case study Jim, Laura and Stan were ready to enter into acontract that is binding and create legal relationships. The businessthat Stan does is legal (selling goods) and is bound by laws of thecontract, which apply to both the seller and the buyer. Furthermore,the subject matter of the contract, which is the car is also legal.Thus, the elements of the legality of object and intention to createlegal relationship were also fulfilled.

Additionally,the contract is also legal as from the case study, there is noinformation that indicates that Jim and Laura were minors or insaneor unduly influence. The ability to engage in a legal contract is anessential concept and component in the law of contract. Capacity ismeasured in terms of age and mental capacity (Beatty et al., 2015).

Onemust have attained majority age and of sound mind (Beatty et al.,2015). From the conversation of Jim, Laura, and Stan, one can makethat the parties had the capacity to contract. Also, if there wereminors or unsound mind, the contract would be still binding if thecar was a necessity to Jim and Laura. Thus, for a contract to bevoidable or void when examining the capacity to contract, one mustnot look at the issue of age or sanity only, but also the necessityof the object under contract to the party or parties (Beatty et al.,2015).

Also,there must be a mutuality of obligation (Beatty et al., 2015). Bothparties must be willing to do something or have a duty to. A contractwould not be legal if its performance depends on the actions of oneparty (Beatty et al., 2015). This element was fulfilled in the casestudy when Jim and Laura accepted the duty to pay a monthlyinstallment for the car, while Stan committed to holding the car forone day and give it to them on hire purchase.

Voidand Illegal Agreements

Contractswhich have been declared expressly, as illegal by law are notenforceable in a court of justice(Harris, 2015).In this case, contracts that are against public policy or threatenthe national security fall under these categories of void andunlawful contracts. Even if they contain all the elements of a validcontract, they are illegal.

Moreover,the contract would be void under Uniform Commercial Code as any saleof goods contract that is above $500 should be documented. From thecase study, Laura and Jim had prepared to pay a monthly installmentof $400. This means that the entire price of the car is above $500.

However,there is an exception, which allows the contract to be enforceable tothe extent where the agreement had been performed (Beatty et al.,2015). Thus, under the law, Stan was not wrong to hold onto depositas Laura and Jim had promised to purchase the car, which he kept itfor a day as he had promised them. Stan in his defense can argue thatif he had not kept that promise probably, he would have sold the car,so Jim and Laura inconvenienced him.


Itremains undoubted that there was a valid and enforceable contract atleast from the facts given. Jim and Laura did approach a motor dealerand offered to buy a car, which happened to be a blue, four-windowsedan. They entered into a contract to buy a car, but under theUniform Commercial Code, the agreement is enforceable to the extentthe parties had already performed as it was not written. Thus, Jimand Laura and Stan entered into a contract, but they cannot finalizethe deal.


Beatty,&nbspJ.&nbspF.,Samuelson,&nbspS.&nbspS., &amp Abril,&nbspP.&nbspS. (2015).Introductionto Business Law(5th&nbsped.). Boston, MA: Cengage Learning.

Harris,P. (2015). Anintroduction to law.Cambridge University Press.