In this case scenario, an agreement took place between Jack and Jane. In this agreement, Jane decided to sell the Lotus Super 7 sports car at the rate of $25000 to Jack. Jane has made plan to go overseas and for that he needs finance. For that reason he made a decision to sell his sports car for gaining some money. The consequence of invitation of treat has been followed by Jane. He gave an offer of $25000 to Jack and Jack accepted the offer. Proper consideration took place but in the agreement there are some loopholes. All the elements are present in this agreement and the contract is void but some obligations arise in this case which can be solved when the rules are applied properly for the given scenario (Brown, I, 2001). With the help of IRAC method the case is discussed below.
Issues
As per Contract act of 1999 of section 9, there are some terms or rules of contract act, but those terms and conditions are not expressed clearly in the agreement (Merkin, R, 2013). Jane has not stated the price of the of Lotus Super 7 sports car clearly here. The market value of the car is only described here, which is $25000. This offer is stated in implied terms and this type of offer is also known as open ended offer. The offeree (Jack) accepted the offer without knowing the rate of the offer. Even while making the offer Jane has not stated the condition of the sports car. The invitation of treat is lacking because of it unexpressed unclear description of the product and unclear description of the rate of the product (Brown, I, 2001). All these are the vital issues of this case.
The offer rate of the Lotus Super 7 sports car, which is given by Jane, is similar to the market value of the car, that is, $25000. The condition of the product is also not described here properly. In the perspective of Uniform Commercial Code (UCC) of article 2, there are some rules which the offeror should follow while making any offer (White, et al. 2002). But seller’s obligation starts in this point because as per uniform code, the value of the second hand product should be less than the market value of any product. Rather Jack has accepted the rate of the offer but valid rate is not fixed by Jane here. Not only that proper valid agreement has not took place here because the way of the agreement is not stated here that, whether it written, oral or online agreement.
For selling the Lotus Super 7 sports car, Jack has fixed $2500 rate of the product which is too less than the market price of the product. As the market price of the product is $25000, so Jane should have kept 20% less of the value of the product but he fixed the price is a very less rate which is loss for Jane and she cannot gain profit any way by this agreement. As per contract law all the elements of the contract law is described here but obligations are also related in the case because the offerer (Jane) has not fixed the proper price of the product which he is selling to the offeree (Jack), but Jack has accepted the offer, so agreement has taken place here with proper consideration of the rules of contract law.
Rules
Expressed term should be the method which can be used by Jane while making the agreement with Jack. As per section 9 of law of contract, following the rules of express term, the invitation of treat should be properly mentioned by Jane and the rate which Jane has fixed should be mentioned first rather than the rate of the market. Here, breach of sale of goods act has taken place as per section 7 because consumer rights will be effected because every consumer expects that, the price distribution of the product should be properly described and the condition of the product should also be described properly but Jane breached the terms of the Sales of goods act but the agreement took place properly because the offeree (Jack) accepted the offer without asking the price of the offer (Sale of goods [H.L.], 2007).
Breach of Article 2 of Uniform Commercial Code has taken place here because the offeror has fixed the price of the sports care similar with the market value of the car. This is the violation of the rule of UCC (Uniform Commercial Code (White, et al. 2002). Sales of good are inappropriately applied here and for that reason obligation has been created in the agreement which is made between Jack and Jane. It is mandatory that the second hand material should have low price in the market then the recent market value but Jane did not follow that rules and violated UCC by this way.
The rules of market value evaluation are properly not described here because contract law is binding with Property act of 1925 of section 52 and Even section 15 and section 12 of Sales of goods act is breached here (Mahasneh, N, 2001). Here, the offeror or seller (Jane) has not followed the rules of the contract and fixed the price of the sports car very less that the market value of the product. It is profitable for the offeree Jack but for the offeror Jane, it is a loss and he should follow the methods of sales goods act for fixing the proper market value of any product.
If section 7 of contract law is properly applied and then done agreement between both the parties, then the agreement will be void and proper. Expressive method should be properly used and it should be kept in mind that rules of sales of goods should not be violated. The agreement has properly made between Jack and Jane because without getting valid description about the product, Jack accepted the offer. The contract is enforceable because deal was done but consideration did not took place properly because of the violation of rules of express term in the contract which should be followed by any offerer and offeree while negotiating any agreement or forming nay contract.
Sales of goods act of Uniform Commercial codes are stated properly by government. Those rules should be applied in this case, while making contract and fixing price of any second hand product in market (Mahasneh, N, 2001). If those are followed properly and applied by Jane while fixing the price of the product then any problem will not raise regarding any offer which is made by her.
Remedy of sales of goods act and methods of real property act of 2005 should be applied here. Through those act the seller will get idea, that how to fix a price of any product because Jane have no idea that what can be a rate of a second hand sports car and she should follow the perspective of sales of good act, so that she does not run loss while making any deal, as she has made a deal with Jack and he accepted that.
In the three cases the perspectives of contract law is followed where express terms is lacking but a conclusion can be drawn that, some rules are breached here such as breach of consideration of contract law; breach of Uniform Commercial codes and breach of Sales of goods act. As these acts are breached, so the contracts are not proper but an agreement has taken place properly, because acceptance has done by seeing the invitation of treat. But it is necessary that both the offeror and offeree should follow proper rules and regulations of the above discussed acts and that application of acts can be termed as void and proper agreement.
In this case there a contract formation made between a tanker company, “North Ocean Tankers” and the Ship builder for making tankers for the company. The tanker company is the buyer and the ship builder is the seller in the scenario. As per US rules the contract was formed and it was negotiable. Problem rose when 10% devaluation took place in currency of US. Problem started for the Ship builder because he made a perspective that he is running loss and on that note, he demanded extra US$3 million, for manufacturing the tanker. The North Ocean Tankers agreed and promised that they will increase the charge of the manufacturer but after delivery of 9 months, the money was not given. For that reason conflict took place between the promisor and promisee. As per IRAC method, the problems are discussed value and the resolution of the problems is also stated below.
Issues
The main issue occurred when 10% devaluation of currency of United Stated which US government did. Because of the devaluation of currency of US, economists of US start running loss. In this case, North Ocean Tankers is running loss because of currency devaluation and another obligation rises because the Ship builder has asked increase of rate seeing his own profit (O’Sullivan, et al, 2012). It is hard for the promisor to pay the rate but because of urgency of delivery, he promised in terms of contract, that he will pay the extra charge to the Ship builder. Obligation arises because the contract is not properly negotiable because of lack of clear expression of rules (Kennedy, G, 2010). After 9 months of delivery of the product, the promise has not been kept by the North Ocean Tankers and misinterpretation has taken place because the company gave false assurance that they will provide the money on time. So the promisee can sue the promisor and this is the major problem of the case.
Rules
In US this type of contract falls under Federal arbitration act. In this contract, the first rate is described but the later increased rate is not described properly (Sale of goods [H.L.]). In this scene Contract review act is needed to be reformed because in that perspective a new contract papers is needed to be made where the clause of extra rise of money should be described properly in term and condition. As the promisor (North Ocean Tankers) is delaying is paying the money of the promisee, so the promisee (Ship builder) can sue him under Breach of negotiation. If the case is taken to court, then the English law will term this behaviour of the promisee as Unconscionability (Slorach, et al. 2007). Even the promisor can use Misrepresentation act 1967 (Misrepresentation [H.L.], 2007). As per this act, the Ship builder can sate that he is misguided and false statement is given to him that North Ocean Tankers will give the money in time and after 9 months of the product delivery the price of the tanker is still not give to him and breach of Federal arbitration act took place in this case.
Application
Some remedies can be described and applied in the perspective of this case. They are Specific Performances, Reinstitution of Cancellation and Damages.
In this case scenario, Reinstitution and cancellation remedy can be applied. Punitive dispute occurred in this case, where the ship builder economically loses his finance and time and did not receive proper wages in time. The North Ocean Tankers are running economic loss and so they are unable to pay the debt of the Ship builder in time. The main reason of the fall of the business is devaluation of currency. So in this case the company can take the help of US government following the factors of Bankruptcy act 1966 (Nichols, P., 2012). As per this act the company can show its loss and bankrupt condition to the English court and appeal for remedy by the help of Bankruptcy act. The court gives 6 months time to pay the debt of the promisee and the promisee has to wait for sometimes in this case. So this is only the remedy which the North Ocean Tankers can apply to save their business and to get rescued from the Ship Builder and US law.
In this case contract between a buyer and seller or a promisor and promisee is described. In this case the devaluation of value of currency affected negatively to the contract and both the promisor and promisee is affected by this consequence. The full contract method is changed and problem rose. The Ship builder and North Ocean Tankers both was the victim of economic loss. The promisor became traitor by giving the misrepresentation with false statement. The breach of Federal arbitration act and breach of negotiation of contract took place. In that perspective, the English court can punish the promisor but if they apply the Bankruptcy act, them it can act as remedy by which the North Ocean Tankers can be saved, otherwise as per misinterpretation act and Reinstitution or cancellation the Ship builder can sue the company under English law.
Brown, I. (2001). Commercial law. Oxford: Butterworth.
Kennedy, G. (2010). Negotiation. London: Profile.
Mahasneh, N. (2001). The seller’s obligation of delivery and conformity under a contract for sale of goods.
Merkin, R. (2013). Privity of Contract. Hoboken: Taylor and Francis.
Misrepresentation [H.L.] A bill intituled an act to amend the law relating to innocent misrepresentations and to amend sections 11 and 35 of the Sale of Goods Act 1893. (2007). Cambridge [England].
Nichols, P. (2012). Bankruptcy Act 1966. Chatswood, N.S.W.: LexisNexis Butterworths.
O’Sullivan, J. & Hilliard, J. (2012). The Law of Contract. Oxford: OUP Oxford.
Sale of goods [H.L.] A bill intituled an act to consolidate the law relating to the sale of goods. (2007). Cambridge [England].
Sale of goods [H.L.] The Federal Arbitration Act. [Washington, D.C.]: Congressional Research Service, Library of Congress.
Slorach, J. & Ellis, J. (2007). Business law. Oxford: Oxford University Press.
White, J. & Summers, R. (2002). Uniform commercial code. St. Paul, MN: West Group.
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