CONTRACT LAW

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CONTRACT LAW

The Legal Issue

Whether there is a legally binding and enforceable contract between Ann and Bella for the purchase of the Sofa.

The Rule of Law

For a contract to be legally binding, parties to the contract must have the intention to be legally bound (as ruled in Esso Petroleum Ltd v Commissioners of Customs and Excise), there must be sufficient consideration that will allow them to be in contract (as held in Thoma v Thomas), there should be and offer and the acceptance[1].

Application of Law

Judging the intention of Ann and Bella objectively, there is high likelihood that a reasonable person will conclude that despite Ann and Bella being friends, the agreement that they entered was on business nature and had consequences to both of them (Ann would not get furniture, and Bella would not dispose her furniture) if either part fails to meet her obligation and thus had intention to be legally bound[2].

Earlier offer by Bella to sell the sofa at $100 lapsed after Ann made a counter offer to buy the sofa at $100.  Bella accepted the counter offer. The consideration in this case is the $ 100 purchase amount that Ann promised to pay Bella as the value of the sofa. The earlier consideration of $100 is not a good consideration as ruled in Stylk v Myrick because it is a past consideration [3].

Conclusion

Ann and Bella have an enforceable and legally binding contract. The manner in which the agreement was executed amounts to a legally binding contract, where there is a consideration (of $100), Ann made an offer, and Bella

[1] Burnham, Scott J. Contract Law for Dummies. Hoboken: John Wiley & Sons, 2011

[2] Contract law. London: Cavendish, 2006.

[3] Andrews, Neil. Contract law. Cambridge, United Kingdom: Cambridge University Press, 2015.

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