Business law contract principles and applications

¶ … legally enforceable contract has several critical components, the first of which is an offer. An excellent example of this is the selling of a used vehicle. The buyer makes an offer of a particular amount of money for the car and/or the seller offers the car for sale. There must also be acceptance -- either in writing, according to the stipulations of the UCC, or for contracts involving smaller amounts of money, evidence of an acceptance of the offer. The car's seller will likely write out a contract detailing the exchange of the vehicle for the money (Legal elements of a contract, 2013, State of Texas).

There must be a legal purpose. Contracts are not legally enforceable if they involve transactions which are illegal (such as exchanging illegal drugs for a car). There must be a mutual agreement -- both parties must agree to the 'deal' and the seller has the right to refuse to sell the car if the buyer does not offer an adequate amount. Something of value must be exchanged. For example, the buyer offers money in exchange for the used car (Legal elements of a contract, 2013, State of Texas). A contract does not have to involve the exchange of money (the buyer could offer services instead) but something 'of' value must be exchanged. The subject matter must be clear (the seller or buyer cannot create an ambiguous contract designed to underhandedly make the agreement less advantageous to the unwitting other party) and finally, the agreement must be between two legally consenting adults (Legal elements of a contract, 2013, State of Texas). A teen buying the car will likely have to ask the parent to officially enter into the contract for him or her.

Q2. Provide additional facts to your scenario that will show how the Statute of Frauds Evidence Rule under UCC Article 2 can come into play.

When selling a used vehicle, the seller or buyer must be careful to avoid entering into a contract based upon fraudulent principles. For example, a seller presenting a car for sale as in good condition, when he or she knew that the car needed major mechanical repairs would constitute fraud. "To prove fraud, you must show the defendant: 1. Made an intentional misrepresentation; 2. Intended that you relied on the misrepresentation; 3. That you have been negatively affected in some way" (When breach of contract crosses into fraud, 2013, Stone Law Firm). If the seller knew the car needed a new engine and did not disclose it; if the car had been in a flood and the seller did not tell the buyer; if the seller rolled back to odometer, or committed some other offense that caused the buyer to think the car was in better condition than it actually was, this would constitute fraud. The car's unexpected need for repair, the need for an early replacement of the worn-out vehicle, or simply the buyer being deprived of his or her money in an exchange for a worthless car would support the contention that the fraud had created a negative impact upon the buyer.