LAW531 LAW/531 Contract Creation and Management Simulation. Business Standards Transcript
Speaker: Narrator, Robert “Bob” Johnson, Michael Smith
Narrator: Bob is a local used-car dealer and he’s feeling pretty good at the moment. He’s about to close a great deal with another used-car dealer, Mike. Mike has agreed to pay Bob more than he expected for a like-new car on his lot. The car’s on consignment from its owner, Al. Bob and Mike had talked about the deal over the phone and e-mail. During Mike’s visit to Bob’s dealership they settled on a final figure of $25,000.00. Once Bob received the payment, he would then write a check to Al for $22,000.00 and keep $3,000 as a consignment fee. All he had to do was say yes.
Mike: Sounds great. I can’t believe you’re letting this go for so little. I mean for $25,000 (pause) I feel like I’m stealing.
Bob: Yeah, right?
Mike: Take care.
Narrator: The next day when Mike got into his office, the phone rang.
Bob: Hey Mike, this is Bob. Hey, I know you were going to write me a check for $25,000, but could you write two checks instead? (Pause) One for Al for $22,000 and one for me for $3,000.
Narrator: Mike thought about it for a moment and came back with an unexpected response.
Mike: I’m going to have to reject your counteroffer, Bob. (Pause) No, we HAD a deal but you just rejected my original offer. (Pause). Look, there’s nothing on the table from my side anymore. (Pause) I tell you what? I’ll give you $20,000.
[End of Audio]
Does U.C.C Article 2 (Sales), Section 201 apply in this situation?
Did Bob’s suggestion constitute a counteroffer? Or was it simply an offer to modify an existing contract?
Can Bob enforce the original terms?
To enforce a contract, the following four requirements must be met. Determine if each requirement has or has not been met, and then explain your answer.
Offer: Met ______ Not Met ______
Acceptance: Met ______ Not Met ______
Consideration: Met ______ Not Met ______
A Lawful Object: Met ______ Not Met ______
Explain: An offer requirement has been met in my opinion, because the narrator stated that Bob “is about to close a great deal with another used-car dealer, Mike”. This is good evidence that the offer requirement was met. One cannot close a deal unless there was an offer.
Acceptance: Met ___x___ Not Met ______
Explain: An offer must be expected for the contract to exist. The acceptance begins when one person agrees with the terms of an offer made by another person voluntarily. Acceptance can be expresses in words or deeds (Chandler, 2013). Therefore, in the case with Mike and Bob there is an acceptance. One can see it based on the narrator’s words who says that “During Mike’s visit to Bob’s dealership they settled on a final figure of $ 25,000”. In my opinion, settling i