Binding Contracts Assignment Example | Topics and Well Written Essays - 1250 words

Binding Contracts - Assignment Example In our case, Dave and Sam are friends from the same University, with Dave wanting to indulge Sam in a business deal, where they could purchase iPads from a supplier who is seeking to expand his business in Australia. In this case, Sam is worried because he does not have sufficient money and thus opts to say nothing. Dave concludes that both will contribute $500 each to purchase the iPads, which they will sell at a profit and share the profits equally. Considering the requirements of the laws of contract, for an offer to become legally binding, there must be a mutual consent between the two parties (Wilmot, 2009 p35). One party must make an offer and the other party must accept that offer. In this case, Dave is the party making an offer, which Sam is reluctant to accept. A binding agreement is established if the parties involved accept the offer as it is. In case one party gives a different term regarding the offer, then that becomes a counter offer, indicating the rejection of the or iginal offer (Black, 1979 p23). In our case, the original offer required both parties to contribute a Sum of $500 each. However, contrary to the requirement, Sam leaves Dave a message to the effect that he can only contribute $200 and get 20% of the profit share as opposed to the 50% he would have obtained by contributing $500. Therefore, Sam has offered a different term to the agreement, making a counter offer. At this point, the original contract becomes void and unenforceable (Peter, 1979 p45). Therefore, there is no binding agreement in existence between Dave and Sam. Further, under the laws of contract, two parties can be involved in negotiation or pre-emptive talks, where they discuss the terms of the contract just before committing to it. This is referred as an invitation to treat (Horwitz, 1974 p100). In our case, Dave and Sam are discussing about the business deal in a coffee shop, where Dave concludes by himself that they have to enter into the business and make equal cont ributions, without having Sam confirm. Therefore, the discussion they had in the coffee shop amounts to an invitation to treat, where Dave is inviting Sam to consider the iPad business deal (Ewan, 2005 p400). Thus, this is not a contract but a mere invitation to treat, meaning there is no binding agreement between Dave and Sam. More important to the creation of a binding contract is the fact that there has to be an intention to have the two parties legally bound by the agreement they establish (Barnett, 2008 p482). In this case, the two parties involved did not indicate any intention of being legally bound by the agreement. While Dave was developing the business deal that they shall indulge in, Sam was nonresponsive. As a matter of fact, Sam only agreed to contribute $200 to the deal, to avoid offending Dave since he is a friend. Thus, the agreement in this case was established based on friendship without any legal intention created by the parties involved. In this case, the contrac t is not legally binding and thus it is voidable (Gardner, 1992 p170). Therefore, there is no binding agreement that obliges Sam to pay Dave any money. Question 2 In this case, Dave approaches Jane to partner with her in securing the deal and have her contribute $500 to purchase the iPads for sale. In fact, Jane is excited about the whole idea and wants them to make it a full time business of importing 100