Outline the basic principles of Contract Law. Cite the laws that are set in motion by a breach of contract. Apply their knowledge in daily situations where this area of law comes into play. Make informed decisions in respect of matters covered in the topics of the course, such as engaging in contracts.
Read the following case carefully and answer the questions that follow: – Ken and Samuel were enjoying a round of drinks after work. Ken told Samuel that he was under financial stress, and was looking to sell his terrace house as soon as possible. His wife had quit her job to look after their children. His business was also dull. He also said that he wanted to sell one of the 2 family cars, as the maintenance did not make economic sense.
Samuel was always on the lookout for good bargains. Therefore, Samuel asked Ken if he had any price in mind for his house. Ken said that he had not had any valuation done yet, and that he had to pay up debts of about $450,000. His property agent was working on his case.
Samuel then asked if he had any price in mind for the car. Ken answered that he did not, but added that he would be willing to consider anything above $80,000 for his 9-year old car. In this instance, Ken was referring to the Toyota Estima (a multi-purpose vehicle, or MPV). However, Samuel thought that Ken was referring to the Porsche Cayenne, which is a luxury Sports Utilities Vehicle (SUV). Both cars were about 9 years old.
2 days later, Samuel called Ken on the telephone, and said that he would like to offer him the following deals:
- He made an offer to buy Ken’s house at a price of $688,000. Samuel said that it would be more than sufficient to cover Ken’s debts of $450,000.
- He also made an offer to buy Ken’s car at a price of $88,000. Samuel said that a car that was 9 years old would fetch around that price in the market.
Ken agreed, and confirmed that they had 2 deals. Samuel was very pleased with himself. He knew that the house would fetch no less than $1 million, and that the SUV would cost no less than $150,000. Since Ken had agreed, Samuel thought that he had “locked” him in at very low prices.
The next day, Ken called Samuel and apologized, saying that he could not sell the house to Samuel, as the property agent had brought a buyer who offered him $1.2 million. Ken said that the Option to Purchase had already been granted to the buyer. Samuel was furious. He shouted at Ken stating that they had “sealed” a deal over the telephone the previous day, and that he would sue him if he did not sell the house as agreed at $688,000. Ken was shocked at Samuel’s outburst and hung up the telephone. Samuel tried to call him several times after that, but Ken ignored or rejected his calls.
Samuel then sent Ken a text message, stating that Ken had better at least kept his word that he would sell the SUV to him at $88,000. Ken replied by text message, stating that he had never intended to sell his SUV, and that Samuel was still welcome to buy his MPV at $88,000
Samuel is now completely mad. He knows that you attended the GSP 165 course. Samuel wants your opinion on the following matters:
- Apply the principles of Contract Law that you have learnt to the facts of the above case. Identify the facts relating to the 2 subject matters that Ken and Samuel are quarrelling about, i.e. the house and the car. In each case, argue your case as to whether or not there was a valid and binding contract made between Ken and Samuel. (About 200 – 300 words) [90 marks]
- Finally, answer Samuel’s ultimate question: Did Ken breach the 2 contracts, or not? (About 15 – 25 words) [10 marks]
This TMA tests your ability to:
- Outline the basic principles of Contract Law.
- Cite the laws that are set in motion by a breach of contract.
- Apply their knowledge in daily situations where this area of law comes into play.
- Make informed decisions in respect of matters covered in the topics of the course, such as engaging in contracts.