Contract - Internal Memorandum Case Brief
...sentative. Additionally, the UCC allows merchants to accept a patron¡¦s offer with minor variations to the terms extended without it being considered a counter-offer. In Ms. Valdosi¡¦s case, the offer was accepted by an authorized representative of Galaxy Computer store who signed the written contract agreeing to each term extended in Ms. Valdosi¡¦s offer. The contract formed was a bilateral contact, whereby a promise to pay was given in exchange for the sellers promise to ship the goods purchased within the terms of the agreement. Consideration: Consideration is an important basic requirement of a valid contract and is defined as the legal value, or benefit conferred or detriment incurred. There must also be mutuality of consideration, meaning each side gave and received something of legal value. In Ms. Valdosi¡¦s case it is important to determine if there was consideration and what consideration each party gave. Being a bilateral contract, the mutuality of the consideration is demonstrated by the promise each side makes to each other. The actual monetary value of the consideration does not matter as the law is looking for the legal bargain. The benefit conferred in this case is the exchange of money and old computer system (Ms. Valdosi) for a new Pentium 4 computer system (Galaxy Computer store) within a set period of time. The consideration is legally sufficient to consider the contract valid. Subject Matter/Contractual Capacity: The subject of the contract was a new Pentium 4 computer system. This is a legal subject to contract as it neither violates public policy (malum in se) nor is prohibited by statutory regulations (malum prohibitum). Since both parties signed the contract, this is evidence that the contract terms were agreed to in writing rather than orally. With the merchandise value exceeding $500, the written contract would satisfy the Statute of Frauds and UCC requirements. If the contract had not been in written form, the contract would not be enforceable. What is unclear from the information provided is if any interest accrued during the twenty-four month payment period. The assumption is made in this case is that interest will accrue and that the business followed statutory guidelines and standard business practices to set the appropriate interest rate, thereby creating an enforceable contract. However, if the interest rate charged for extending credit was above the legal limit, the contract would have violated the usury laws and would be unenforceable. Finally, the information provided does not clearly state the capacity of the parties entering into the contract. Again it is assumed that both parties are of the majority age and have the mental capacity to enter into a contract. If either party were not of the majority age, the contract may be voidable at the option of the minor unless the minor party reaffirms the contract at the age of majority. Even if the minor party were emancipated, this contract would not be considered essential to support life and enforcing recovery of reasonable value (quasi-contract) is not likely an option. Although there seems to be a few questions with about contractual capacity, the risk of assuming usury laws and age/mental capacity are satisfied in this situation are minimal. For the purposes of this initial analysis, the capacity of the parties to enter into a contract is assumed satisfied. Contract Terms: Under common law, the provisions of an offer must be as specific as possible with respect to price, subject matter, parties, and timing of performance. The law requires that these terms be certain, definite, and capable of being readily understood by a reasonable person. In Ms. Valdosi¡¦s case, the terms of the agreement are as follows by party: „h Ms. Valdosi agreed to: 1) trade in her old computer and pay a down payment of $1000 at the time she receives the new computer system, and 2) pay the remaining balance due to Galaxy Computer store at $40 per month for a total of twenty-four months. „h Galaxy Computer store agreed to: 1) accept Ms. Valdosi¡¦s old computer, $1000 down payment, and payment of the remaining balance at $40 per month for twenty-four months as full consideration for a new computer system, and 2) deliver the new computer system within one month to Ms. Valdosi. Although all the details of the contract were not provided in the information submitted, the basic terms are clear and understandable to a reasonable person. What is not conclusive from the information provided is whether the remaining balance payable each month, including interest accrued, began thirty days from the date the contract was signed or begins thirty days from the date Galaxy Computer store¡¦s performance is complete. Depending on when payment was due, Ms. Valdosi may or may not have suffered damages when the merchandise was not delivered within the set timeframe. Contractual Intent: In order to have a meeting of the minds; the parties must be in agreement as to the terms of the contract. They both must have talked about the same thing and meant the same thing in the same context. In this case, both Ms. Valdosi and the Galaxy Computer store agreed to the terms of the contract. Both were aware of the subject being discussed and both understood they were entering into a contract. The signatures evidence the mutual assent of both parties to the written contract terms in this case. There was undoubtedly a meeting of the minds between the parties making this contract enforceable. Statute of Frauds and UCC Requirements: The Statute of Frauds applies when a contract is for an interest in real estate, performance that will not be completed within one year, consideration of marriage, guarantees, sales of goods valued at over $500, and executors¡¦ promises to pay the decedent¡¦s debts. The Uniform Commercial Code is a statutory enactment codifying certain areas of contract law, specifically with respect to sales contracts and security agreements. Although the contract performance extends beyond a one-year period, the provision of the Statute of Frauds is concerned with situations where it is impossible for the performance of the contract to be completed within one year. If it were at all possible for the performance to be completed within one year, the contract would not fall within the statute. This contract, however, was for merchandise sold for more than $500 and, therefore, both the Statute of Frauds and UCC require the contract to be in writing. This case information does not provided enough details to determine if the entire contract was in writing, although it does state that the contract included the terms and conditions and was signed by both parties. Given that, the written contract prepared in this case would satisfy the Statute of Frauds and UCC requirements necessary for this contract to be enforceable. Breach of Contract: The main question is this case is whether Galaxy Computer store breached the terms of the contract. A breach of contract is a failure of a promisor to fulfill a contractual obligation. A material breach is a breach of contract that goes to the heart of the agreement. Galaxy Computer stores accepted the offer extended by Ms. Valdosi; the terms...