Contracts law principles and applications

Contracts Law

Case Study- Contracts Law

There were two offers. There is an offer is a meeting of the minds can be reached by the recipient of the offer accepting the terms of the offer. The first offer was by Galaxy Computer store and consisted of Galaxy placing an ad in the paper for Pentium 4 computers for $3,000. The second offer was by Gabrielle and consisted of her offering a her old computer as a trade-in, $1,000 down, and monthly payments in lieu of $3,000 in exchange for the computer. Because Gabrielle made a counter-offer to Galaxy's offer, there were two offers.

There was acceptance of the contract. Acceptance means that the party to whom the offer was directed consents to its terms and agrees to the formation of the contract. There was no acceptance by Gabrielle of Galaxy's offer of a computer in exchange for $3,000. Instead, Gabrielle made a counter-offer to Galaxy. Galaxy accepted the counter-offer by signing a contract with Gabrielle, in which it was provided that Galaxy would tender the computer in exchange for $1,000, Gabrielle's old computer as a trade-in, and Gabrielle's promise to make monthly payments on the balance. Therefore, while Gabrielle did not accept Galaxy's offer, Galaxy accepted Gabrielle's offer.

The subject of the contract was the sale of a computer. Contracts for the sale of merchandise are legal. Assuming that the provision requiring Gabrielle to pay the balance of the purchase price over a two-year period did not violate any usury laws, the subject of the contract was legal. Furthermore, while the Statute of Frauds in the UCC bars the enforcement of unwritten contracts for the sale of goods over $500 or that cannot be completed within a year, the contract was in writing. Therefore, the subject of the contract was legal.

There was consideration. Consideration is the exchange of benefits by the parties. The consideration tendered by Gabrielle was her promise to give Galaxy her old computer, $1,000, and two years of $40 monthly payments. The consideration tendered by Galaxy was its promise to give Gabrielle a Pentium 4 computer. Therefore, there was consideration by both parties.

The terms of the contract provided that, one month after the contract was signed Galaxy was to deliver the Pentium 4 computer to Gabrielle. At that time, Gabrielle was to tender her old computer and $1,000 to Galaxy. Then Gabrielle was to make $40 monthly payments for a period of two years.

There was a meeting of the minds regarding price. Although Gabrielle did not accept Galaxy's offer of a Pentium 4 computer for $3,000, Galaxy accepted Gabrielle's counteroffer. Because the parties agreed that Gabrielle would receive a Pentium 4 in exchange for her offered consideration, there was a meeting of the minds regarding price.

It was necessary for the parties' contract to be in writing. The UCC has adopted the Statute of Frauds and requires contracts for the sale of goods worth over $500 to be in writing. Furthermore, the UCC and the Statute of Frauds require that contracts that cannot be completed within one year to be in writing. The contract involved the sale of a $3,000 computer and required Gabrielle to make monthly payments for a period greater than a year. Therefore, it was necessary for the contract to be in writing.

It is unclear whether or not all of the terms of the agreement were contained in the writing. Although the facts state that the parties agreed on the delivery date for the computer, it is unclear whether or not the date of delivery was contained in the writing.

There was a breach of contract. A breach of contract occurs when one party fails to fulfill its contractual obligations to the other party. Galaxy breached its obligation to deliver a Pentium 4 to Gabrielle on the specified date. Gabrielle may or may not have breached her obligation to deliver her trade-in and a $1,000 down payment on that date, depending on the terms of the parties' agreement. From the factual situation, it is unclear whether Gabrielle's obligations to Galaxy were conditioned on Galaxy's delivery of the Pentium 4. A breach is material if a party's failure to complete a condition of the contract affects the matter, as distinguished from the form, of the contract. Galaxy's breach was a material breach because the purchase of a Pentium 4 by Gabrielle was the entire subject of the contract. If Gabrielle committed a breach of contract, her breach may also have been considered material because the terms of the purchase involved her tender of a trade-in and $1,000 to Galaxy. However, if Gabrielle was ready, willing, and able to complete her obligations under the contract on the delivery date, and her failure to do so was because Galaxy failed to deliver the Pentium 4, she would not have been found in breach.

A court of law would enforce the parties' contract. The agreement complied with the terms of both the UCC and the Statute of Frauds. Furthermore, even if the delivery date was an additional oral term to the contract, nothing in the UCC or the Statute of Frauds prevents oral modifications or additional terms unless the contract specifically stated that it embodied all terms of the parties' agreement. Even if the contract contained such limiting language, the UCC imposes open the parties a duty of good faith, which would have required Galaxy to tender a Pentium 4 within a reasonable time.