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Understanding the Essential Elements of Contracts

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      Contracts can a dangerous business if one of the parties fails to fulfill their obligations. In contract law, failing to fulfill the requirements of a contract is referred to as a breach of contract. A breach of contract of one party is usually a disadvantage for the other party unless that injured party is compensated in a mutually agreeable way. Contracts are usually between two people but at times a third party can be involved.

       One of the essential elements of contracts is an offer and acceptance. Fredo, the owner of the Candy Restaurant in Oakland, makes Sandiman, of Sandiman Construction Ltd, an offer of $250,000 if Sandiman begins the renovation of the Candy Restaurant on exactly July 1st and completes it by August 31st. Sandiman accepts this offer. There is no evidence whether this contract has been just stated orally or if both parties signed the contract on a piece of paper. Therefore, it may have been an informal contract rather than a formal contract.

      However, even though Sandiman agreed to fulfill all obligations as stated in the contract, it was not possible for him to do so. Sandiman realized that he was not able to complete all that work on time because it is just too much work to do and he also has a shortage of staff. In addition, being under a time constraint did not help matters. Sandiman stated that he would be willing to do all the work, even with the shortage of staff, if he could be given till the middle of September to complete the job. Therefore, Sandiman was trying to re negotiate the terms of the contract. What took place between Fredo and Sandiman is known in legal terms as a battle of the forms. As a result, Fredo made counteroffer to Sandiman. By making a counteroffer, Fredo made the other contract void. Therefore, under these circumstances, Fredo was not obligated to pay Sandiman $250,000.

      When making the counter offer, Fredo requests that Sandiman completes the work on time for an additional sum of 50,000, to be paid on August 31st along with the original sum of 250,000. Therefore, Fredo makes a new offer of 300,000 in exchange for the satisfaction of his requirements. However, it is important to mention that Fredo makes this counter offer through Ted who is the CEO of Sandiman Construction Ltd. When Sandiman calls and asks about speeding up the renovation process, he speaks to Ted. This counter offer is legally binding despite the fact that Fredo does not speak directly to Sandiman but makes the final negotiations through a third party. Sandiman is aware of the counter offer because he expects the additional 50,000 on August 31st.  Sandiman completes the work on time. The additional sum enables Sandiman to have more staff working for him. Sandiman is right for demanding the extra payment because he accepted Fredo’s counteroffer and fulfilled his part of the obligation. By refusing to pay this sum, Fredo has breached the new contract.

      Sandiman has a right to sue Fredo for the $50,000. Fredo is legally bound to pay the original sum because he has received the services. Sandiman’s option is to go to court and have the court order Fredo to pay him. By stating that he has provided the service on time, Sandiman can use the function of what is called a quasi contract to his advantage. A quasi contract would provide a legal protection for Sandiman against being treated unjustly by not being paid the required sum. By definition, a quasi contract can provide the enforcement of the originally agreed upon contract by the order of the court. A quasi contract ensures that all parties involved in the original contract are treated fairly.

      The legal dispute between Fredo and Sandiman can be compared to the Goldthorpe v Logan (1943) precedent. In this case, a woman answered posted by a beauty salon that advertised the removal of facial hair. The woman went for the treatment but it failed. The woman sued the company and won. The ad served as an offer and the woman accepted the offer. Therefore, she had a contract. The ad promised to do something and it failed. In the same manner, Fredo promised to do something for Sandiman yet he failed to do so. Although Fredo did not make direct negotiations with Sandiman but rather through Ted, still he made a promise of paying the additional $50,000.

     On the other hand, Fredo might understand why he is being asked for the $50,000. Obviously, he does not feel that it is his duty to pay the additional sum. Looking at this legal matter from his perspective, Fredo might be going by the original contract and the previously agreed upon terms. Although Fredo did make a counter offer to Sandiman, he was induced to it by Ted, the CEO of Sandiman Construction Ltd. Although he agreed to it, he might feel that it was not a fair bargain. He might be remembering that Sandiman has originally agreed to perform all the work on time for the previously stated amount of money. Therefore, he might be thinking that Sandiman expects what is called in legal terms as an unjust enrichment.

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