Tony advertises a 2014 Honda Civic car for sale at $12,999 on a website known as ‘Koala Car Sales’. Mike reads the advertisement. He is interested and so calls Tony. Tony invites him to inspect the car, giving him the address.
After inspecting the car, Mike says ‘I will give you $7,000 for this car.’ Tony responds, ‘That’s no good. I would want at least $10,000 as those tyres and rims are worth $4,500.’ Mike replies, ‘Sorry mate but it isn’t worth that much to me.’
Three weeks later Mike sees the same advertisement on the same website but this time selling the car for $10,500. Mike phones Tony and say ‘I would be prepared to pay $5,500.’ Tony laughs and says ‘How about we go back to your original price of $7,000. We have a deal.’
Discuss the legal effect of each communication and determine if an agreement was formed.
Assuming there was an agreement reached between Tony and Mike, discuss whether it would be supported by the necessary intention and consideration to be recognised as a contract.
Answers
Answer:
Explanation:
T
Answer:
Yes, it is a legal contract.
Explanation:
Introduction
A contract is defined as an agreement that must contain a promise and that the parties intended to be legally enforceable in a court of law. Therefore, this case study considers this circumstance to see if it contains enough of the four key components of a contract, which are an offer, an acceptance, a consideration, and an intention, in order to determine whether the aforementioned case would be considered to be a contract to be legally binding.
As per the case-
A clear representation of the terms on which one party is willing to enter into a contract with another party and be bound by those terms is known as an offer.
- First and foremost, the commercial is a treat invitation.
- Thus, Tony extended an offer to treat by listing his 2014 Honda Civic automobile for sale on "Koala Car Sales." By exchanging Tony's automobile for $7000, Mike turned that invitation into an offer. Since Mike replied to Tony, the invitation is now formally an offer. Tony, however, declined the offer and told Mike, "That's no good." As a result, neither an agreement nor an intention are carried out.
- When he said he wanted to sell the car for $10,000 or more, Tony then made a counter-offer. Mike then views the advertisement for the invitation to treat a second time, but this time Tony's projected price has dropped from $12,999 to $10,000.
- Now, Mike keeps making the $5,500 car purchase offer to Tony, but Tony haggles for the price Mike originally proposed. The only legitimate form of communication between two parties is through sales and deals. There was no valid contract or agreement made because Tony and Mike couldn't come to an agreement on an offer at either meeting.
- If all six conditions (offer, acceptance, consideration, intention to establish a legal relationship, legality and capacity, and certainty) are met, the contract is valid and enforceable. When all parties agree to the terms of the offer, an agreement is created. Only when the agreement is in place is the contract formed.
- In the event that Mike (the offeree) and Tony (the offeror) agree and accept the $7000 offer, a contract will be created because the two parties are bound by a promise.
- Accepting an offer requires two things: the willingness to accept the offer as-is and to pay the requested price .
- Consideration is the amount the promisor requests in exchange for anything.
Since, in the aforementioned instance, Tony consented to sell the vehicle for Mike. As a result, a bilateral and legal contract is established.
#SPJ3