Touchstone 2: Did Jim and Laura Buy a Car?

Business Law: Description
Touchstone 2: Did Jim and Laura Buy a Car?
SCENARIO: Jim and Laura Buyer visit the local car dealership because they are interested in buying a new car. The car they currently have is aging and is starting to have mechanical problems. Jim and Laura would share the new car, and use it to go back and forth to work and school. Before going to the dealership, Jim and Laura decide that they can only afford $400.00 a month in car payments.

Once at the car dealership, Jim and Laura meet Stan Salesman. Stan shows them several vehicles and Jim and Laura test-drive several of the cars. Jim and Laura particularly like the blue 4-door sedan. Therefore, they agree to give Stan Salesman a $100.00 deposit to hold the car for a day. Stan Salesman does not give them the receipt but guarantees that the $100.00 is refundable. No documents were signed.

The next day, Stan Salesman calls Jim and Laura to ask them when they would like to take delivery of the car. Jim and Laura, on the way home from the dealership, decided that they were not going to buy the car because they did not want to spend that money each month. Therefore, Jim and Laura tell Stan Salesman that they have decided not to buy the car and request their $100.00 deposit back.

Stan insists that the $100.00 was a deposit on the car and was meant to be part of the contract to buy the car. Stan is very persistent and insistent that Jim and Laura have contracted to buy the car; therefore, the $100.00 will be applied to the purchase price of the car. Jim and Laura are shocked and angry as not only do they not want to spend the money, but now feel as though they are being duped by Stan Salesman.

Jim and Laura have an appointment to see a lawyer in a few days, but know you are a student taking a business law class and come to you for advice. They are very frazzled, and understandably upset that they may have just purchased a car. Since you have been taking business law, you have read and understand the elements of a contract and the defenses to a contract. Therefore, although you are not a lawyer, you provide some basic advice from what you’ve learned in your business law class.

ASSIGNMENT: In three to five (3-5) pages, advise Jim and Laura based on the above facts as presented and the material covered in the lessons. In your paper, be sure to address the following:

Define the elements of a legal contract using examples from the scenario where applicable.
Decide whether or not there was a contract for the purchase of the automobile.
Identify the facts from the scenario which support your decision on whether or not a contract exists for the purchase of the automobile.
Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other websites do not qualify as quality academic resources.

Introduction

Jim and Laura are in a dilemma as to whether they have entered into a contract to purchase a car from the dealership. The dealer insists that the $100 deposit made by the couple was part of the agreement to purchase the car, while Jim and Laura claim that it was only a refundable deposit to hold the car for a day. In this paper, we will analyze the scenario based on the elements of a legal contract and relevant legal principles to determine whether Jim and Laura have entered into a binding contract with the dealership.

Elements of a Legal Contract

A contract is a legally binding agreement between two or more parties that creates rights and obligations that are enforceable by law. The basic elements of a legal contract include offer, acceptance, consideration, and intention to create legal relations (Beatty, Samuelson, & Abril, 2020).

Offer is the first element of a contract, and it refers to a proposal made by one party to another indicating a willingness to enter into a legally binding agreement. Acceptance is the second element, and it involves the unconditional and unequivocal acceptance of the offer by the other party. Consideration is the third element, and it refers to the exchange of something of value between the parties. Finally, the intention to create legal relations is the fourth element of a contract, and it means that the parties must have an intention to create a legally binding agreement.

Decision on Whether or Not There Was a Contract

Based on the scenario, there is no clear evidence that Jim and Laura entered into a contract with the dealership. Although they test-drove the car and made a $100 deposit, they did not sign any document indicating that they had agreed to purchase the car. Therefore, the dealership’s claim that Jim and Laura had entered into a contract to purchase the car is not tenable.

Identifying the Facts that Support the Decision

Firstly, the $100 deposit made by Jim and Laura was refundable, according to the dealer’s guarantee. This implies that it was only a deposit to hold the car for a day and not part of the contract to purchase the car. The refundable deposit was only an indication of their intention to buy the car, but it did not create a binding agreement.

Secondly, the absence of a signed document or a verbal agreement between Jim and Laura and the dealership makes it difficult to conclude that there was a contract for the purchase of the car. Contracts must be evidenced in writing or through an oral agreement to be enforceable by law. In this case, there is no evidence that the parties had a mutual agreement to purchase the car.

Conclusion

In conclusion, Jim and Laura did not enter into a contract with the dealership to purchase the car. The $100 deposit was only a refundable deposit to hold the car for a day, and there was no signed document or oral agreement indicating that the parties had agreed to purchase the car. Therefore, Jim and Laura should demand the refund of their deposit from the dealership, and they should not be forced to buy the car against their will.

References

Beatty, J. F., Samuelson, S. S., & Abril, P. S. (2020). Business law and the legal environment (3rd ed.). Cengage Learning.