Case Law Analysis: Contract Law – Assessment 2

Case Law Analysis: Contract Law – Assessment 2

Write a 2-page analysis of a selected federal or state court case pertaining to the topic of contract law.

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

?Competency 1: Articulate the importance, context, purpose, and relevance of law in a business environment.

?Articulate the importance, context, purpose, and relevance of law in a business environment.

?Competency 2: Evaluate the role of contracts in commercial transactions.

?Evaluate the role of contracts in commercial transactions.

?Competency 5: Develop information literacy skills as applied to business law.

?Exhibit information literacy skills as applied to business law.

Case Law Analysis: Contract Law – Assessment 2

Contracts are the heart and soul of commercial transactions. Different types of contracts bind parties together in business dealings. Review contracts that you have signed recently?a lease, an employment agreement, an extended warranty?to examine not only the language but also the scope of these agreements. Examine the language in the contract that outlines how disagreements will be resolved, and the penalties that adhere to either party for breach of the contract.

Read the Assessment 2 Context document for important information related to the following topics:

?Importance of Contracts

?Consideration, Capacity, and Legality.

?Breach of Contract.

?Creditors, Debtors, and Bankruptcy.

?The New Frontier: E-Contracts.

Assessment 2 Context

Case Law Analysis: Contract Law – Assessment 2

Importance of Contracts

Imagine a business environment that had no contracts, as we know them today. Parties would rely simply on trust, agreements, handshakes, and oral assurances. Courts of law would have absolutely no way of determining the intent of either commercial party upon entering into a joint endeavor without such disagreements becoming a he said, she said scenario. Judges and juries would have to begin anew to determine the scope of every agreement, and remedies for breaching such agreements would be almost impossible to determine without clear-cut evidence for one party or the other. In short, a commercial transactional world lacking contracts is one built upon false promises and blind trust. Such a world would make it impossible for commercial parties to enter into risky financial propositions, because no assurances could be made about contractual performance or damages. It is for that reason that contract law remains one of the most important components of business law today.

Consideration, Capacity, and Legality

One of the most important foundational concepts to recognize is that a contract must have something of value at stake, or, better known by its legal term, consideration. Consideration simply refers to something of value that two parties contract about, so that courts can answer one fundamental question: why have the parties agreed to do something, and what is the value of this shared endeavor? As you might imagine, consideration is typically in the form of money, but it can also be a service or a product. Even in instances where one party does not intend to enrich itself from its actions, a single dollar will be used as consideration, just to signal to the court that something of value (albeit of very tiny value) was at stake.

Parties must have the capacity to enter into an agreement, or, in other words, the ability to understand the terms of the agreement. Oftentimes when contracts are breached, one party will argue that some mitigating factor limited its ability to fully understand the details of a contract, and therefore that party should be excused from performance. Courts recognize certain classifications of capacity?for example, minors cannot enter into contracts?but, overall, the courts have been extremely unwilling to find a lack of capacity against parties, especially when a commercial party has been active in the business law landscape for quite some time. It would be incredulous to believe that such a person or organization was unsophisticated about business law.

It goes without saying that parties cannot contract for anything illegal?as strange as it may seem, parties sometimes bring their disputes to a court of law even when the controversy in question involves something that is outside the scope of what is legally permissible.

Case Law Analysis: Contract Law – Assessment 2

In short, contracts must be entered into for something of value, between two parties that fully understand the terms of the agreement, and for a purpose that is recognized as legal in a public policy context.

Breach of Contract

Breach of contract is another fundamental issue in business law. Consider what happens when one party makes an offer to another, but the other party changes any part of that original offer. When that occurs, the party that made even a slight change has, in the eyes of the law, rescinded the original contract and offered the original party a new contract, because the terms of the original contract were changed. What the party has done is to submit a counteroffer. The original party then has the option to pull out of the contract, if the counteroffer does not meet acceptable terms.

Once the battle of the contracts is over and both parties have agreed to a document, signifying their cooperation in the commercial endeavor, the text of the contract itself usually spells out what damages will ensue and how one party will compensate the other for any breach. Often, this entails monetary compensation, but it can involve something else, such as performance of some responsibility. Courts will look within the contract to determine not only what the expectations of the parties were, but also to divine whether the parties had agreed to some course of action should one party not perform the terms of the contract.

Case Law Analysis: Contract Law – Assessment 2

Creditors, Debtors, and Bankruptcy

Another basic element of contract law is the relationship between creditors and debtors. With the recent implosion of the housing market in the United States, millions of people experienced overwhelming debt, firsthand. Lenders who did not properly screen borrowers suffered as well, in some cases receiving massive bailouts from the federal government, or from sovereign wealth funds of foreign countries such as Singapore, Dubai, and Kuwait. Take some time to examine how that relationship has evolved in a legal context, and how both debtors and creditors have rights regarding their relationship in a lending situation.

Bankruptcy laws in the United States have changed dramatically, and it is now harder for many individuals to obtain bankruptcy status. Congress reformed the bankruptcy laws due, in part, to a perception that many citizens were relying upon bankruptcy protections to evade creditors after spending money on frivolous, unnecessary, and luxury items. Critics argue that many individuals are deeply in debt not because of frivolous purchases but because of overwhelming health care costs, exploding higher education fees, and a variety of other expenses that have far exceeded the rate of inflation.

However you feel about the public-policy origins of debt and the rising costs of a variety of services and products, one thing is certain; the bankruptcy laws are now much more creditor-friendly than they have ever been, and individuals and businesses who seek the protection of bankruptcy laws will often find that they will not be able to completely escape the reach of those who seek remuneration for debts owed.

Case Law Analysis: Contract Law – Assessment 2

The New Frontier: E-Contracts

A fascinating component of contract law today is the emergence of the e-contract, or contracts that have relevance to the evolving commercial universe of cyberspace. The cyberspace commercial environment has exploded in the last ten years, not only within the United States, but around the world. Entire industries have effectively been co-opted by the online universe, including the sale of books, music, movies, and a whole host of other products and services.

The courts have grappled with how to regulate contracts in an e-commerce world; not only because the parties are usually separated by many hundreds (if not thousands) of miles, but because the parties may actually live and operate in separate countries. A contract dispute between two parties on eBay might involve litigants in Indiana and India, or South Carolina and South Africa. How do courts determine what law adheres (or which country’s legal system governs) contracts that are formed through an online transaction? This is new territory for the courts. You are encouraged to speculate on how the courts may interpret e-contracts in the future, and how that might impact the global economy and commercial transactions in cyberspace.

question to consider

Case Law Analysis: Contract Law – Assessment 2

To deepen your understanding, you are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of the business community.

?What is the difference between an agreement and a contract? What is the difference between an offer and a contract?

?If you sign a purchase agreement to buy a house but do not give the seller a deposit, and, after signing, you change your mind before you move in, are you bound by your agreement?

?If you offer $500,000 for a person’s house and the person responds that he or she wants $500,001, do you have a contract?

?In a contract for the purchase and sale of a house, can the parties agree that the price for the house will be the market value of comparable houses on the day of closing?

Case Law Analysis: Contract Law – Assessment 2

?Are there situations when someone can be bound to keep their promise even though they received nothing in return for their promise?

?If the parties sign a purchase and sale agreement for the purchase of a house, and the house is destroyed shortly before the deed to the house is signed by the seller, who bears the risk of loss?

?In the modern world, with the growing maturity of young people, are rules protecting minors from the enforcement of contracts archaic?

Resources

Suggested Resources

The following optional resources are provided to support you in completing the assessment or to provide a helpful context. For additional resources, refer to the Research Resources and Supplemental Resources in the left navigation menu of your courseroom.

?Assessment 2 Context.

Click the links provided below to view the following multimedia pieces:

?Analyzing a Case Law

This is a capsule summary of the case that provides basic information about the parties, the controversy, and the disposition of the lower court.

The first paragraph in the Facts section usually explicitly identifies the heart of the controversy. In the first Fact paragraph, we learn that what is in controversy is the condition of a 1952 Mickey Mantle Topps baseball card worth $17,750.

Here we learn of the initial response from Strek, who essentially notes that had earlier notice been given a remedy might have been negotiated to resolve the situation.

This is Fitl’s follow-up action to the initial response from Strek, seeking a second opinion from a recognized expert in the field.

We learn that Fitl is basing his argument upon the expertise of Strek as a reputable sports card dealer. This will be an essential piece of information as we learn how the case will be analyzed by the Court and what the responsibilities are of a dealer in the field.

It is significant that the Court designates this entire paragraph regarding the background expertise of the expert who analyzed the card after Fitl’s purchase. Lengthy language is devoted to this expert because it will be relied upon by the Court as expert evidence in analyzing the value of the card and what, if anything, could or could not have been done to remedy the controversy.

The last part of any Fact section usually tells you what the lower court ruled if the case at issue is an appeals case. That is the case here. Here we learn that the lower court ? the District Court ? found in favor of Fitl for the full amount of the baseball card plus any related costs. Strek is appealing the decision hoping that the judgment will be reversed based upon an error of law made by the District Court.

The Court begins by stating what is recognized in most states in contract law. This comes out of the Nebraska Uniform Commercial Code.

Case Law Analysis: Contract Law – Assessment 2

After the law is stated, the Court explains what the public policy purposes are for the notice requirement.

The Court takes additional steps here, demarcating which of these considerations is the most important, which in this controversy is how a seller can cure a breach if given sufficient time to address a buyer’s complaint.
This is an essential part of the case; although Fitl did not have the card professionally examined until two years after purchase, the Court explicitly notes that once he learned of that fact he gave immediate notice to Strek.

As a matter of general law, the Court makes clear that in most cases a buyer needs to make timely notice of a defect to a seller regarding a defective product in order to maximize the opportunity of a successful remedy.

However, as we see here, the Court notes that in this specific situation it would not have mattered if Fitl had told the seller a day after the purchase or two years after purchase because timely notice would have been immaterial to curing the problem, which was a completely worthless card.

Pay close attention to the Court’s choice of quote here. The key word is “reasonable,” and the Court is noting that the buyer would not have had any immediate reason to have a card professionally examined if, as in this case, a buyer could reasonably rely upon the expertise of the seller in making a purchase of this amount.

Case Law Analysis: Contract Law – Assessment 2

The conclusion in this case states that the District Court judgment is affirmed, which means that it is upheld. It should be noted that Strek can still appeal this further, which in this case would be to the state Supreme Court.

Credits
Subject Matter Expert:Jason LumInteractive Design:Christina AdamsInstructional Design:Mo YangProject Manager:SueAnn AdamsBottolfson

?Throughout this course, you will be required to submit case law analysis papers. This multimedia presentation points out key areas of a case law. Use this presentation to help you complete your case analyses. Refer to this media as often as you need to.

Case Law Analysis: Contract Law – Assessment 2

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By admin in Essays on October 17, 2016