12 March 2015
Contracts Formation and Enforcement Case
(1) A contract is a formal agreement between two or more people, or parties that are guided by legal laws and the constituents must attend to their obligations in line with the agreement on the contract. At least all contracts should focus on attaining the contract’s goals and should be specific in nature. Contracts form a critical part of many businesses, and it is fundamental that parties to a contract be conversant with the terms and conditions included in the contract. It is also essential that they understand their rights and responsibilities as constituents in a business agreement. Virtually all contracts have three basic contract areas or issues that include the formation process, the enforcement process, and remedies. In general terms, the contract between Flooring Specialists and the potential buyer is guided by the United States Contract Law, a common law in the US that outlines the basic requirements and components of a contract. This contract is justified to be guided by this law because it has some of the essential components of a contract as defined by the common law. In specific terms, this contract (Flooring Specialists and the potential buyer) is guided by Article 2 of the UCC. Contracts have three major areas that cover the entire basic requirement of a contract. In the formation of a contract, all parties must be in agreement to attain certain goals.
(2) The formation process entails the coming together of contract parties and describes the essential elements of entering into a contract. The parties must enter either into an oral or written agreement where they define the terms and conditions that will guide the contract. All the parties should be of economic importance in the contract by either offering money or service in exchange. The agreement people make in a contract, and the goods and services they wish to trade on should be legally valid to meet the legal requirements of a contract. Finally, in the agreement stage, it is important that the parties be sane to be conscious of the terms in the contract. Enforcement means that the parties take legal precautions to avoid fraud of either party as governed by the Statute of Frauds. It is advisable that participants in a contract enforce a contract by appending their signatures if the cost of goods and services entailed in the contract is worth $500 or more. Enforcement in a contract prevents future misunderstandings that may arise. In a contract, remedy refers to the payment or damages a person pays for breaching the terms and conditions. In most cases, the court orders the person who fails to meet certain obligations to pay some money as compensation. Under UCC 2-206, participants have the right to pursue legal actions in case they feel that other participants have breached the contract. In cases where a valid contract at law exists and any participant breaches the terms and conditions, the court orders the participants in the contract to enter into a quasi-contract or what is known as estoppels where they engage in a contract but under strict surveillance. In cases where no contract at law exists but fairness is necessary, the court orders the offender to pay some money as a remedy.
A. Contract Formation - Question - Did Flooring Specialists and the potential buyer form a valid contract?
Answer – Yes, Flooring Specialists and the potential buyer forms a valid contract because all the four essential elements of a contract are met.
Definition – A contract should be guided by the law to ensure that the promises are fulfilled and the court is in a position to offer a remedy in case either party of the contract fails to honor the agreement.
Application/Discussion: To determine if a contract is formed, the court would apply the four elements of a contract:
(1) Agreement: There exists a valid contract between Flooring Specialists and the potential buyer