Did Jim and Laura enact a contract for buying a car?

Explore the elements of a legal contract and analyze whether Jim and Laura enacted a contract for buying a car. Understand the implications of the Uniformed Commercial Code (UCC) and the requirement for a written contract. Learn about the conduct of the parties involved and the enforceability of the verbal agreement.

Did Jim and Laura enact a contract for buying a car?
LEG 100 – Business Law I

BUSINESS LAW
Did Jim and Laura enact a contract for buying a car?
Elements of a Legal Contract
For the contract enactment in the given scenario, it is essential that three key observations
ought to be highlighted. The first one relates to presence of a verbal agreement which must
highlight that the contracting parties have made an agreement in relation to the sale of blue four
door sedan. The second one relates to the moment when an oral agreement was made between
Stan and Jim & Laura with regards to holding the car for one day for a payment of $ 100 which
was deemed “refundable”. The third one pertains to the agreement provided by Stan Salesman to
the arrangement. The contracts tend to be government by common law, private law along with
statute law. The agreement related terms with regards to parties that are exchanging promises
would be considered under private law. This branch of law may bypass a host of the rules which
are put in place by the state (Legal Information Institute (LII) Contract).
For the sale of the given car, agreement can be written or oral. With regards to the
scenario provided, there is intention on part of Jim and Laura with regards to making the
purchase for the sedan. Because they were interested in making the purchase of car, hence a
deposit of $ 100 was given to Stan Salesman. As a result, it can be concluded that the conduct of
the parties gives rise to an implied informal legal contract (Beatty, Samuelson, & Sanchez Abril,
2016).
No Contract for Automobile Purchase
With regards to Uniformed Commercial Code (UCC), the extent of flexibility available
tends to be higher with regards to contract law in comparison to common law. In the given
scenario, it would be fair to expect that Stan would operate in a highly responsible manner

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considering that he deals with automobile sales daily. The standard of conduct recommended by
the UCC should be adhered to by Stan Salesman despite Jim and Laura having no knowledge
about the same.
With regards to $100 deposit money, it is noteworthy that no receipt was provided.
Instead, a verbal guarantee was provided by Stan with regards to money being refundable. Also,
no documents were signed by the prospective buyers. It is evident that very next day Jim and
Laura have communicated that they did not intend to make the purchase and thereby requested
the refund of the $ 100 deposit. This verbal communication and the fact that Jim & Laura
reached to Stan in a timely manner indicates that no agreement for sale of automobile existed.
Even though, the customer (i.e. Jim and Laura) did execute a deal which could have have lead to
the purchase of the car but simultaneously legal right is available to cancel the deal without
incurring any additional cost. It would be reasonable to assume that the purchase value of the car
would exceed $500 and the nature of agreement enacted is verbal.
As per section 2-201 of UCC, the sale of good for a good which is priced
higher than $ 500 should be carried out in writing. However, it is not
imperative that the agreement should be summarized in written. As per the
Code, the writing ought to be sufficient enough to highlight that the
underlying parties have enacted a contract (Beatty, Samuelson, & Sanchez
Abril, 2016). In the given case, assuming a sale price for the car in excess of
$ 500, Stan Salesman should have made a written contract for the sale of
the sedan.

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Conclusion
In the present case, a written contract was required which would have culminated into
contract formation. Considering the nonbinding nature of the verbal agreement, it would be fair
to conclude that the deposit amount of $ 100 could be recovered by Jim & Laura from Stan
salesman. With regards to the appropriate conduct in accordance with UCC, it is evident that
Stan does not have a strong case as the standards of conduct set under UCC have been directly
violated. Owing to absence of a written agreement, enforceability is lacking in the given case.
Further, in deriving the conclusion, it has been assumed that no documents have been signed by
either parties and there is reliance on verbal agreement only.
.

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References
Beatty, J. F., Samuelson, S. S., & Sanchez Abril, P. (2016). Introduction to business law (5th ed.).
Boston, MA: Cengage Learning.
Legal Information Institute (LII) Contract. (n.d.). Retrieved from Cornell University Law
School: https://www.law.cornell.edu/wex/contract